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Environmental Report by hedongchenchen


Environmental Report

                                                Corporate Overview
          Name                                   FUJI HEAVY INDUSTRIES LTD.
          Established                            July 15, 1953
          Paid-in capital                        ¥144,450 million (as of March 31, 2002)
          Employees                              14,601 (as of March 31, 2002)
          Head office                            7-2, Nishishinjuku 1-chome, Shinjuku-ku, Tokyo 160-8316, Japan
          Non-consolidated net sale              ¥921,709 million (For fiscal year ended March 31, 2002)
          Principal manufacturing locations and products
                                       Gunma Manufacturing Division
                                           (Gunma Prefecture, ,Ohta City and others)
                                                       Utsunomiya Manufacturing Division /Transportation and Ecology
                                                       Systems Division
                                                           (Tochigi Prefecture, Utsunomiya City, and others)
                                                           Aircraft, railway rolling stock, environmental equipment
                                                       Saitama Manufacturing Division
                                                           (Saitama Prefecture, Kitamoto City)
                                                           General-purpose engines, engine electrical generators
                                                       Bus Manufacturing and House Prefabricating Division
                                                           (Gunma Prefecture, Isezaki City)
                                                           Bus bodies, prefabricated minihouses, Automobile repair parts

           Trends in sales                                                        Non-consolidated net sales breakdown by divisions
             ( Billions of yen)
             1,000                                                                 Bus Manufacturing and                   Transportation and
                                               917.5                 921.7
                                                                                 House Prefabricating Division              Ecology Systems
                                   928.2                 923.1                           ¥13.7 billion                          Division
                           856.3                                                                                              ¥13.2 billion
                                                                                 Industrial Products Division
                                                                                         ¥31.3 billion
                                                                                 Aerospace Division
                                                                     449.0          ¥66.3 billion

               400                   431.1                                                                      Fiscal 2001 sales
                                              404.5                                                               ¥921.7 billion
                           357.4                         394.9

                                                                                                           Automobiles Division
                                           Overseas sales                                                     ¥797.2 billion

                   1997            1998       1999        2000        2001
                           Note:Figures are rounded off at 100 million              Note:Figures are rounded up to the nearest ¥0.1 billion.
                                Amounts less than ¥0.1 billion are omitted.

           Trends in paid-in capital                                              Trends in the number of employees
             (As of end of March each year)

             ( Billions of yen)
                                                        144.4     144.4
                                                                                             14,763              15,077
                                                                                    15,000                                  14,849
                                                                                                       14,685                        14,601

              100                    85.1      88.1                                 14,000


               50                                                                   12,000


                   0                                                                     0
                           1998     1999       2000     2001      2002                       1997      1998      1999         2000    2001
                                                                          Year                                                            FY
                       Note:Amounts less than ¥0.1 billion are omitted.

    ●About This Report
                       ● This report contains achievements of environmental conservation activities carried out in fiscal 2001 (April 1, 2001 to March
                         31, 2002). Achievements occurring prior to fiscal 2001 and in early fiscal 2002 that are mentioned in this report have been
     Range of            induced because they relate to pertinent subjects in this report.
     this report       ● This report mainly covers the activities of FHI's business operations in Japan. From this report, the performance on the envi-

                         ronmental issues of seven domestic consolidated manufacturing and logistics companies, which are considered to have
                         high environmental impact, is also mentioned. Activities of some overseas related companies are also introduced.

     Referred          ●   Ministry of Environment "Environmental Report Guidelines (2000)"
     guidelines        ●   Ministry of Environment "Environmental Accounting Guidelines (2000)", "Environmental Accounting Guidelines (2002)"

     Next issue        Our previous Environmental Report was issued in June 2001. The next report is planned for publication in summer 2003.

                                                                 Message from the Management                                                                 2

                                                                 ENVIRONMENTAL MANAGEMENT                                                              4-15
                                                                  1.    Corporate Philosophy and Environmental Policy                                         4
                                                                  2.    Organization                                                                          5
                                                                  3.    New Voluntary Plan for the Environment                                                5
                                                                  4.    Environmental Audit                                                                   8
                                                                  5.    Environmental Accounting                                                             10
                                                                  6.    Life Cycle Assessment                                                                12
                                                                  7.    Environmental Education                                                              12
                                                                  8.    Environmental Incidents                                                              13
                                                                  9.    Communication                                                                        13
                                                                 10.    Change in Land Use Status                                                            13
                                                                 11.    Overall Achievements in Fiscal 2001 and Fiscal 2002 Goals                            14

                                                                 FISCAL 2001 PROGRAM ACHIEVEMENTS                                                    16-43
                                                                 1. Development Process and Products (Automobile-related Products)                           16
                                                                          Fuel Economy
                                                                          Exhaust Emissions
                                                                          Clean Energy Vehicles
                                                                          Improving Traffic Flow
                                                                 2. Development Phase/Products (Products other than Automobiles)                             22
                                                                          Aerospace Division
                                                                          Industrial Products Division
                                                                          Transportation and Ecology Systems Division
                                                                          Bus Manufacturing and House Prefabricating Division
                                                                 3. Production                                                                               26
                                                                          Amount of Input Resources and Emission Matters in Plants
                                                                          Reduction of Waste Materials
                                                                          Saving Energy and Resources
                                                                          Management of Chemical Substances
                                                                          Reducing Substances with Environmental Impact
                                                                          Green Procurement
                                                                          [Paint Sludge Recycling plant]
                                                                          Challenging Zero Emissions Target Reached at the Utsunomiya Plant
                                                                 4. Recycling                                                                                35
                                                                          Contribution toward a High-Efficiency, Low-Cost Recycling-Oriented Society
                                                                          Procurement and Production
                                                                          Sales and Service
                                                                          Disposal of End-of-Life Vehicles
                                                                 5. Logistics                                                                                43
                                                                          Reducing the Environmental Impact of the Transportation of Completed Automobiles
                                                                          Reducing the Environmental Impact of the Transportation of Service Parts

                                                                 SOCIAL ACTION PROGRAMS                                                              44-45
                                                                 1. Social Contributions                                                                     44
                                                                         Cleanup Activities
                                                                         Exchanges with the Region
                                                                         Donations and Other Voluntary Activities
                                                                 2. Cooperation in Special Events                                                            45
                                                                 3. Lectures and Other Activities                                                            45

                                                                 ENVIRONMENTAL ACTIVITIES BY AFFILIATED COMPANY                                      46-47
                                                                            Support to Affiliated Companies
                                                                            An Example of Activities by Affiliated Companies
                                                                            Actual Achievement of Seven Affiliated Companies

                                                                 OVERSEAS ACTIVITIES                                                                         48
                                                                            Environmental Impact Reduction Activities
                                                                            Social Contribution Activities
                                                                            Providing Dismantling Information on End-of-Life Vehicles
In this report, the following contents are newly added.
1. ENVIRONMENTAL MANAGEMENT                                      PLANT SITE DATA                                                                      49-51
   (1) New Voluntary Plan for the Environment ⋯Pages 5-6         RELATED DATA                                                                         52-53
   (2) Environmental Risk Assessment ⋯⋯Pages 8-9                 FHI ENVIRONMENTAL CHRONOLOGY                                                         54-55
   (3) Life Cycle Assessment ⋯⋯⋯⋯⋯⋯⋯Page 12                      GLOSSARY                                                                                56
Message from the Management
                                          We are pleased to bring you our 2002 Environmental Report, our third issue.
                                          Changes in the global political and economic situations during these three years are
                                          alarming, and the business environment has become severe both inside and
                                          outside Japan.
                                             FHI is aware, however, that even in such a situation, it is extremely important to
                                          conserve the global environment and reduce environmental impact.
                                             FHI believes that our development and growth in the future is possible by
                                          establishing social harmony and increasing the value of the company through our
                                          efforts for environmental issues and by satisfying all the people related to our
                                          company, including our customers, with our products and services. FHI has thus
                                          consistently worked on environmental conservation activities at all the stages of
                                          corporate activities from product development to manufacture, sales and service.
                                             As FHI is a transport equipment manufacturer centering on automobiles,
                                          as well as operating environmental businesses, we believe that we must focus on
                                          our response to environmental issues and continue our efforts for the formulation of
                                          a sustainable society.
                                             With the dawn of the 21st century, the speed of change is becoming ever faster,
                                          marginalizing the companies that cannot adapt. Environmental issues are no
                                          exception. It would not be an exaggeration to say that for automobiles, the response
                                          to environmental issues such as fuel economy, exhaust emissions and scrapped
                                          car recycling may determine the survival of the company. We would hope to lead
                                          the trend and discover our foundation of existence from a global point of view.
                                             The environmental issues include new problems that have not been observed in
                                          manufacturing business before and problems requiring cross-company efforts. In
                                          this sense, FHI hopes to gain opportunities to promote our innovation and
                                          vitalization as well as to contribute to the formation of a sustainable society through
                                          our positive efforts for environmental issues. "FHI Environmental Conservation
                                          Program (Fiscal 2002 through Fiscal 2006)" , which was announced this time and
                                          publicized in this report, was formulated under such ideas.
                                             This issue reports activities of some affiliated companies as well as those of FHI.
                                          FHI hopes to improve the quality and quantity of information reported and deepen
                                          our communication with you. We thank you for taking the time to read this report
                                          and welcome your opinions.

                                                                                                 Kyoji Takenaka
                                                                                                 President and
                                                                                                 Chief Operating Officer

FHI President Mr. Takenaka (middle) observed zero
emission activities at Gunma Manufacturing Division
with GM President Mr. Wagoner, Jr. (left).

                                        While we enjoy a comfortable life at the present day, intensified economic activities
                                        have in some cases caused environmental problems with environmental impacts on
                                        air, water and soil, beyond the natural self-purification capacity.
                                          In our corporate activities, environmental impacts have indeed been caused in
                                        every stage from product development and manufacture, product usage to disposal
                                        of used products.We are aware that ensuring to aggressively implement the
                                        environmental impact reduction activities in all these stages is one of the important
                                        themes to contribute to the society as well as a fundamental condition for us to
                                        make sustainable development as a company.
                                          Based on our "Environment Plan for 2000" released in 1996, we have realized
                                        zero emission plants as one of the outcomes of the environmental conservation
                                        activities.Following the achievement at Gunma Manufacturing Division in the fiscal
                                        2000, FHI achieved the zero emission at Utsunomiya Manufacturing Division and
                                        Saitama Manufacturing Division in the fiscal 2001 as aimed.As for products, FHI
                                        introduced the new Forester in fiscal 2001. All the models of the new Forester
                                        satisfy the 2010 Fuel Economy Standards, a goal for energy conservation of
                                        gasoline-fuelled automobiles and global warming prevention, and they were
                                        certified as Good Low Emission Vehicles (G-LEV).In the management fields, FHI
                                        implemented the risk assessment on the environmental facilities across the
                                        company in the fiscal 2001, further strengthening the liaison with our related
                                        companies regarding the environmental conservation activities.
                                          As our project for the future, focus will be on the reduction of energy consumption
                                        and CO2 emission including the performance of products and on the response to
                                        automobile recycling issues, for which legislation is in progress.For these problems,
                                        we believe that it is important to implement "FHI Environmental Conservation
                                        Program (Fiscal 2002 through Fiscal 2006)" and make efforts for further
                                          We thank you for your valuable opinions to our 2001 Environmental Report
                                        issued last year.Some reports may need further explanation in this 2002
                                        Environmental Report.We ask you to take the time to read this report and would
                                        appreciate our opinions.

                                                                                                Teruo Hanada
                                                                                                Senior Executive Vice President
                                                                                                (responsible for the environment)

FHI Vice-President Mr. Hanada made a speech at an opening
ceremony of new recycling center in the zero emission
achievement ceremony at Utsunomiya Manufacturing Division.

FHI started its Environmental Action Project in 1990, appointed 1992 as the first year of the environment, and has since worked
positively to protect the environment with the Corporate Environment Committee at the center of activities.
    FHI established its “Voluntary Environmental Protection Plan” in fiscal 1992 and its “Environment Plan for 2000” in 1996, and has
steadily worked on environmental conservation along these plans. In order to address the environmental problem, one of the most
important problems in this century, FHI established and released a new plan for the environmental conservation “FHI Environmental
Conservation Program (Fiscal 2002 through Fiscal 2006)” in May 2002.

    1 Corporate Philosophy and Environmental Policy
FHI believes that responding to the global environmental problems is the most important responsibility as a corporate citizen. As a
manufacturer of transportation devices including transport automobiles, FHI has established an Environmental Policy, a basic policy for
carrying out environmental conservation, based on its corporate philosophy. Under this policy FHI has set up guidelines for specific
actions as the Operational Standard.

                                                       Corporate Philosophy
                                                        (Inaugurated in November 1994)
                                        1. We will strive to create advanced technology on an
                                           ongoing basis and provide consumers with distinctive
                                           products with the highest level of quality and customer
                                        2. We will aim to continuously promote harmony between
                                           people, society, and the environment while contributing to
                                           the prosperity of society.
                                        3. We will look to the future with a global perspective and aim
                                           to foster a vibrant, progressive company.

                                                        Environmental Policy
                                                           (Inaugurated in April 1998)

                                             FHI recognizes the integral relationship between the
                                        environment and its business activities, and strives to provide
                                         products that are friendly to the earth, society, and people.
                                           FHI is protecting the environment to ensure our future.

                                              Operating Criteria for Environmental Conservation
                        1) FHI is committed to environmental conservation and gives consideration to
                          environmental impact at every step of product development, design, manufacture,
                          sales, service, and disposal.
                        2) FHI observes the relevant laws, regulations, and agreements with communities and
                          industries, while also promoting voluntary activities in accordance with its own
                          environmental objectives and targets as determined by the Company.
                        3) FHI recognizes the importance of continual improvement and efforts to prevent pollution,
                          and encourages every employee to act with self-awareness and responsibility.
                        4) FHI endeavors to raise environmental consciousness by providing educational
                          opportunities for its employees according to their job status and job description.
                        5) FHI regularly performs audits and inspections to improve its environmental conservation
                        6) FHI is committed to interacting within the community and engaging in joint activities to
                          further environmental preservation.

                                                                                                                                                  Environmental Management

  2 Organization
FHI sets the Corporate Environment Committee as the core of its environmental conservation activities, which determines policies and
plans, ascertains results and achievements, and is actively involved in a variety of activities.
The Corporate Environmental Committee has three specialized committees, each of which has further specialized committees to
promote specific activities. The chart shown below illustrates the organization in the fiscal 2001.

Engineering Environment Committee involved in reducing environmental impact, such as fuel economy and exhaust emissions of products
Recycling Promotion Committee involved in developing recycling technologies and utilizing recyclable resources
Plant Environment Committee involved in reducing the environmental impact of the production process at manufacturing divisions

                                   Chairman: Senior Executive Vice President Teruo Hanada
  Corporate Environment
                                   Secretariat: Environmental Affairs Promotion Office

                 Engineering Environmental Committee
                                            Automobile Division                                Fuel Economy Subcommittee
                                      Industrial Products Division                         Emission Measures Subcommittee
                   Recycling Promotion Committee
                                Recycling engineering Development Subcommittee                        Automobile Division
                                Renewable Resources Application Subcommittee                                Bus Division
                                  Overseas Market Subcommittee                              Special-Purpose Vehicle Division
                                   Domestic Market Subcommittee
                                                                                                                                           Each plant has established the following working groups.
                    Plant Environment Committee
                                    Zero Emissions Subcommittee                            Headquarters environment subcommittee                             Zero Emissions Working Group
                                                                                            Plant Environment Subcommittee
                                Energy Conservation Subcommittee                             ( Gunma Manufacturing Division)                              Energy Conservation Working Group
                                                                                                          (Tokyo Office)
                                Volatile Organic Compound (VOC) Reduction Subcommittee                                                                      VOC Reduction Working Group
                                                                                            ( Saitama Manufacturing Division)
                               Pollution Preservation Subcommittee                       (Utsunomiya Manufacturing Division)                             Pollution Preservation Working Group
                                                                                         (Transportation and Ecology Systems Division)
                                CFC Alternatives Reduction Subcommittee                   (Bus Manufacturing and House Prefabricating Division)           CFC Alternatives Reduction Working Group

  3 New Voluntary Plan for the Environment
The new voluntary plan for the environment “FHI Environmental Conservation Program (Fiscal 2002 through Fiscal 2006)” considers
living with society and developing sustainably, while improving the environment, is ideal. In order to realize an eco-friendly socio-
economic system, the plan aims

             1) to offer clean products from clean factories by clean distribution through clean
                sales outlets to our customers,
             2) to contribute to society with our products, and
             3) to make all the stages clean.

The following pages show the concrete details of “FHI Environmental Conservation Program (Fiscal 2002 through Fiscal 2006)”.

                Environmental Management

    FHI Environmental Conservation Program (Fiscal 2002 through Fiscal 2006)

                       Items                                                                 Goals and actions

                           Promoting energy saving     Aim to reduce energy consumption rate by 28% compared to fiscal 1990 by fiscal 2006
                           and curbing global          Aim to reduce the CO2 emission from the production plants by 6% compared to fiscal 1990 by
                           warming                     fiscal 2006

                                                       Establish stricter standard than the current voluntary standard for newly established and
                                                       renewed environmental facilities in order to reduce the burdens on the air and water
                           Control and reducing        Reduce the emission of chemical substances of the pollutant release and transfer register
                           environmental pollutants    (PRTR)
                           at production plants        Reduce the Volatile Organic Compounds (VOC) emission in the car production lines to the
                                                       level below 45 g/m2 on average by fiscal 2006

                                                       Aim at further advanced zero emission and zero level of the landfill disposal both directly and
                           Reducing the waste
     Clean factories       materials produced in
                                                       Promote recycling of the waste materials and using them as parts of products as well as
                           the production plants
                                                       curbing the generation of waste materials

                           Saving water resources      Reduce the amount of water used in the production plants

                                                       Request our business partners for a research report on the environmental pollutant content
                                                       and establishment of an environmental management system. The following are the target
                                                       dates for establishing the environmental management system:
                                                         Automobile division: by the end of March 2003
                           Green procuring               Industrial products division: by the end of March 2004
                           activities                  Promote the green procuring activities in other divisions including the Aerospace division
                                                       Develop the green procuring activities to our overseas business partners (Automobile division)
                                                         Research on the status of introducing the environmental management system and of the
                                                         environmental pollutant content starts in fiscal 2002.

                                                        Continue to improve fuel economy every full model change or annual model change.
                                                        Achieve fiscal 2010 fuel economy standard at all the weight ranks by fiscal 2006
                           Improving fuel economy
                                                      [General-purpose engines]
                                                       Aim to improve the average fuel economy of general-purpose engines by 15% (compared to
                                                       1995) by 2005.

                                                        Produce excellent low emission vehicles (E-LEV) or good low emission vehicles (G-LEV) for all
                                                        the models except for a few by autumn 2002
                                                        Start to put ultra low emission vehicles (U-LEV) into the market in 2003 and produce ultra low
                                                        emission vehicles (U-LEV) for more than 80% of passenger vehicles by 2005
                           Clean exhaust gas
     Clean products
                                                      [General-purpose engines]
                                                       Aim to reduce the average emissions of HC and NOx from general-purpose engines by 30%
                                                       (compared to 1995) by 2005

                                                        Introduce Legacy B4 CNG to the market limitedly by autumn 2002
                                                        Introduce hybrid vehicles to the market by fiscal 2006
                           Developing products          Develop fuel cell powered vehicles for the next generation
                           using clean energy
                                                      [General-purpose engines]
                                                       Introduce general-purpose engines compliant with CNG and LPG fuel during fiscal 2002

                                                                                                        Environmental Management

                       Items                                                                       Goals and actions

                                                             Improve recyclable design for new models and contribute to a recycling rate of 95% in 2015
                               Improving recyclability         Improve dismountablity in the recycle market such as re-use
                                                               Use easy-to-recycle plastic materials more extensively

                                                              Promote development of technology, which substitutes substances with environmental impact,
                                                              aiming at faster application to developing vehicles
                                                               Further reduce the amount of lead to less than 20% of that of 1996 by the end of 2005 and
                               Reducing substances             attempt further reduction
                               with environmental              Reduce the amount of hexavalent chrome used and stop using cadmium and mercury except
                               impact                          for certain parts

   Clean products                                           [General-purpose engines]
                                                             Promote reducing the amount of environmental pollutants such as lead and hexavalent chrome
                                                             for general-purpose engines

                                                             Promote developing technology to reduce noise that can realize both fuel economy improvement
                               Reducing exterior noise
                                                             and exhaust emissions reduction

                               Curbing global warming
                               regarding air                 Promote further reduction of the amount of refrigerant (HFC 134a) per vehicle
                               conditioning refrigerant

                               Research on traffic           Work further on Intelligent Transport Systems (ITS) that realizes safe and comfortable
                               environment                   motorized society

                               Reducing environmental
  Clean distribution                                         Improve distribution efficiency and work on reducing the amount of packing materials
                               impact in distribution

                                                             Support environmental conservation activities of sales outlets
                                                             Promote recycling and proper disposal at distribution and disposal stage
                               Promoting environmental        Collect and destroy specific chlorofluorocarbon (CFC12), collect CFC12's substitute
 Clean sales outlets           conservation activities in
                                                              (HFC 134a), collect and dispose of airbags, and collect warning flares
                               sales outlets
                                                             Continue to collect used bumpers
                                                             Work to comply with automobile recycling law

                                                             Continue to participate in environmental events, communicate with local residents in plants, and
                                                             deal with visitors to plants
                               Implementing social
                                                             Continue to participate in cleaning activities and forestation activities in the area around each
                                                             Offer cooperation to environmentalists

                                                             Publish environmental reports continuously and release environment-related information by
                               Disclosing environment-       publicity matters
                               related information           Improve the content of environmental reports (e.g. compliance with guidelines, reports including
                                                             group businesses)
Management extension
                               Implementing                  Implement environmental education built in company training. Implement educational
                               environmental education       campaigns through company magazines and various media
                               and educational               Continue to implement lecture meetings and in-company presentation meetings of improved
                               campaigns                     cases

                                                             Establish environmental management system at offices presently with no such system, and
                               Establishing                  improve continuously the environmental management system at ISO14001-acquired offices
                               environmental                 Implement in-company environmental audit and environmental facility risk assessment
                               management system             Strengthen liaison with related companies and establish consolidated environmental
                                                             management system

                               Promoting environment-        Promote environment-related businesses such as wind power generation system and
                               related projects              environmental machines and equipment

                       Environmental Management

    4 Environmental Audit
In the fiscal year 2001, “Environmental Risk Assessment” to office facilities was added and implemented throughout the company,
strengthening the prevention management of environmental pollution.

    Audit by External ISO 14001 Evaluation Registration Organization

            Division                  Type of evaluation       Evaluation dates                                        Evaluation

                                                                                  It was evaluated that the division satisfied the standard and implemented and
                                                                                  maintained EMS. Therefore it was agreed to continue the certification. Slight
Saitama Manufacturing           Regular evaluation
                                                           June 13–15, 2001       nonconformities (regarding implementation of environmental impact evaluation of
Division                        (follow-up evaluation)
                                                                                  newly introduced facilities, etc.) were pointed out but appropriate corrective actions
                                                                                  were taken.

 Utsunomiya Manufacturing                                                         It was evaluated that the division satisfied the standard and maintained EMS.
 Division/ Transportation and   Regular evaluation         July 17–19, 2001       Therefore it was agreed to continue the certification. There was no problem
 Ecology systems Division                                                         pointed out.

                                                                                  It was evaluated that the division satisfied the standard and implemented and
 Gunma Manufacturing                                                              maintained EMS. Therefore it was agreed to renew the certification. Slight
                                Renewal evaluation         February 5–8, 2002
 Division                                                                         nonconformities (regarding reasons to change environmental management
                                                                                  program, etc.) were pointed out but appropriate corrective actions were taken.

                                                                                                                            Note) EMS: Environmental Management System

    Internal Environmental Audit
FHI implements internal environmental audits in each division in order to continuously improve environmental activities. In the internal
audit, FHI checks the status of attainment and the implementation of plans related to environmental conservation prescribed by its
environmental management system (EMS) and reconfirms whether environmental activities and systems conform to stipulations. The
result of audit is reported to the executives.

    Environmental Risk Assessment
FHI believes reducing environmental risks is our responsibility as a corporate citizen in order to sustain and develop production
activities, while living in harmony with the local community. For this purpose, FHI introduced and implemented its “Environmental Risk
Assessment” to predict and evaluate the degree and countermeasure of impact of facility-related accidents on the environment,
working on minimization of environmental risks from the viewpoints of both software and hardware.

● Purpose of Introduction                                                          ● Selection of Facilities to Evaluate

Various activities based on EMS and office environment                             Among the facilities installed in each office, 325 facilities that
patrol have attained good results for discovery of potential                       may have impact on the environment were selected and their
causes of environmental accidents and prevention of                                environmental risks were assessed in the fiscal 2001.
accidents so far. In order to minimize the environmental risk
of facilities, “Environmental Risk Assessment” was introduced
this time. It is necessary to take countermeasures by
clarifying the factors that cause environmental accidents
systematically and regularly, based on the assumption that
“facilities do break down” and “humans do make operational
errors” and also after consideration of possibilities of fires and
natural disasters.

                                                                                           Environmental Management

● Quantitative Evaluation of Environmental Risk                       ●Implementation of Risk Reduction Countermeasures

In reducing environmental risks of facilities, it is necessary to     The results of the environmental risk assessment on facilities
grasp the size of a potential risk of each facility and clarify the   are reported to the executives. For the facilities that need
priority of countermeasures. As most environmental risks are          preferential implementation of risk reduction,
due to “faulty facilities” and “operational error of an operator”,    countermeasures are to be discussed and implemented.
FHI evaluated the risk from both “factors on the facility side”
and “factors on the management side” and quantified the                 Risk reduction process using environmental risk assessment
environmental risk of a facility in question by the degree of
                                                                      Formulation of implementation plan of
environmental impact. Conditions for evaluation included              environmental risk assessment
“normal condition” , “ facility malfunction” , “ fire happening

                                                                                                                                            Confirmation of effect of environmental risk reduction
around”, “earthquake” and “wind and flood damage”.
                                                                      Implementation of environmental risk
                                                                      assessment in each office

                                                                                                                  Facilities that earned
                                                                      Quantitative evaluation of                  fewer points than the
                                                                      environmental risk                          internal standard point

                                                                      Collection of assessment results of all     Ensuring management
                                                                      the offices

Evaluation by risk assessment evaluation
officers                                                              Report the details of the
                                                                      environmental risks to the executives
                                                                         Approval of implementation of risk
● Determination of “Facilities that Require Preferential              reduction countermeasures
Implementation of Risk Reduction”

As a result of quantitative evaluation of the environmental           Implementation of risk reduction
risk, a facility that earned more points than the internally          countermeasures

designated standard point is determined as “a facility that
requires preferential implementation of risk reduction”. In the
                                                                      ● Sample Case of Implementing Environmental Risk Reduction
fiscal 2001, 18 facilities as requiring preferential
implementation of risk reduction from the factors on the              Following is sample case of managing deleterious substance
management side, and 70 facilities from the factors on the            in Utsunomiya Manufacturing Divisoin.
facility side were altogether determined.

                                                                      Full view of chemical tank
                                                                         Installing a wall to prevent chemicals from
                                                                         flowing out
                                                                         Installing an ambient fence for security
                                                                         Installing a small door that is used only
                                                                         when filling chemicals

                                                                      The small door is locked to prevent
                                                                      problems with mis-filling.
                                                                      Chemicals can be filled only when the
                                                                      liquid is checked and the door is
                                                                      unlocked.                                                                        9
                         Environmental Management

  5 Environmental Accounting
The following pages show the total results in the fiscal 2001 for FHI only. In the fiscal 2001, FHI started the environmental accounting
also in the related manufacturers and distributors in the FHI group, which are considered to have a large pollution load. Please see
pages 46 to 47 for those related companies.

       Purpose of Introducing Environmental Accounting System                                                                        Concept and Calculation of Environmental Costs and Economic Effects
      To make effective environmental investments and                                                                       With reference to the guidelines of the Ministry of
      environmental conservation activities                                                                                 Environment (Year 2000 and 2001 Reports), FHI formulated
      To aim to activate our organization for dealing with
                                                                                                                            its own guidelines according to its environmental conservation
      environmental issues
      To promote a deeper understanding of our approach to                                                                  activity organization, based on which the environmental costs
      environmental conservation by publicizing these results                                                               and economic effects are calculated. (Those for the related
                                                                                                                            companies are also calculated based on our guidelines.)

                                                                                                        1) Costs for reducing Costs for reducing the impact on the                                        Cost                      time
                                                                                                           the environmental environment during the production
                                                                                                                              cost, effect, time                                                           Effect
                                                                                                                                     Cost for achieving effects for
                                                                                 Definition and                                      environmental conservation whose                                     Cost                      time
                                                                                                        2) Investment costs          effects continue for several terms
                                                                                 categorization of
                                                                                 environmental                                       cost, effect, time                                                                         Effect
                                                                                                        3) Other costs               Costs not belonging to the above categories

                                                                                                         Investments in              Show for reference purposes only
                                                                                                         environmental               (The depreciation of the facility for the purpose of environmental conservation is
                                                                                                         facilities                  treated as an environmental cost.)

       Results of Aggregation of Environmental Costs and Effects in Fiscal 2001 (object of aggregation: FHI (parent company)), (period of aggregation: April 1, 2001 to March 31, 2002)
                                                                                                 Environmental costs                                                                                                                  facilities
                           Cost category                                              Amount (    million)                                                                                                               Related     ( million)
Boxed text is a cost category in “Ministry of Environment Guidelines”                                                                     Details of principal activities in fiscal 2001                                 pages
                                                                             Fiscal 2001 Fiscal 2000 Fiscal 1999                                                                                                                    Fiscal 2001

                        Operating cost of incinerator, maintenance                                                 Ceasing operation of incinerator in Saitama and Utsunomiya Manufacturing Divisions (September 2001)
                        cost                                                                                                                                                                                              26
                        Recycling and processing of waste                                                                                                                                                                31-34
                                                                                                                   Achieving zero emission in Saitama and Utsunomiya Manufacturing Divisions (end of March 2002)
                        materials                                               893         722              686                                                                                                                         323
                        Reduction of waste materials                                                               Establishing a recycle center (Utsunomiya Manufacturing Division)                                       34
                                  Resource circulation cost                                                        In-company recycling of paint sludge                                                                    30

                        Energy conservation, CO2 emission reductions                                               Shifting to the use of inverters in equipment used in production , such as pumps and fans
                                                                                249         163              112                                                                                                         26-27           332
                              Global environmental conservation cost                                               Utilizing excess air from autoclave compressor (Utsunomiya Manufacturing Division)
  Costs for reducing
 environmental impact   Wastewater treatment, emitted gas
 (Production stage)                                                                                                Adding effluent block embankment and ditch such as tanks and improving                                  29
                        treatment                                                                                  prevention of outflow from the refill outlet
                        Environmental pollution prevention                      817         818              800                                                                                                                         219
      Business area
          costs                                                                                                    Renewing and improving wastewater treatment facilities                                                  __
                              Environmental pollution prevention cost

                        Reduction in VOC emissions                                                                 Improving facilities for collecting purge solvent
                                                                                73           59              57    Extending the use of high-solid paint (paint with low solvent content)                                                47
                              Environmental pollution prevention cost                                                                                                                                                      __
                                                                                                                   Introducing electropainting facilities (repair parts for buses and cars)

                        Reduction in emissions of CFCs alternatives
                                                                                24           25              21    Reducing the leak rate in insufflation to the air-conditioner and collecting
                                                                                                                   residual gas in hoses                                                                                   29             1
                              Global environmental conservation cost

                         Total costs for reducing environmental impact        2,056        1,787        1,677                                                                                                                            922

                        Education, ISO 14001 related issues, investigation                                         Environmental education, training, workplace activities to improve the
                                                                                                                   environment                                                                                             12
                                                                                486         682              629                                                                                                                         __
                                  Management activity cost                                                         Maintaining ISO 14001 certification, others                                                             8
  Investment costs
                        Research and development                                                                   Improving fuel economy, reducing exhaust emissions, improving recyclability                           16-25
                                                                              20,998       18,383       16.298                                                                                                                        1,806
                               Research and development cost
                                                                                                                   Research and development of new energy (wind power generation)                                          22

                        Total investment costs                                21,484       19,065       16,926                                                                                                                        1,806
                        Cost increment for material changes,                                                                                                                                                               __
                        Costs for disposal of end-of-life products,                                                Changing raw materials to protect the environment
                        social contribution, and others
                                Upper and lower stream cost                                                        Collecting used bumpers from the market, recycling them into inner trim and
       Other costs                                                            1,838         880              721                                                                                                           41            286
                                     Social activity cost                                                          other parts

                                Environmental damage cost                                                          Preparing environmental reports, cleaning up areas surrounding plants,
                                                                                                                   preparing countermeasures for environmental incompatibilities, others                                   44
                                        Other costs
                              Total cost                                      25,378       21,732       19,325                                                                                                                        3,014

                                                                                                                                               Environmental Management

●Cost Calculation Method                                                                                           production of waste materials and changing the methods for
                                                                                                                   waste disposal) and the effect of the reduction in energy
For related cost (depreciation cost, maintenance costs, etc.)                                                      costs are calculated for each cost category. As for the
of facilities that are used for environmental conservation as                                                      economic effects of facilities (depreciation cost), the effects
well as other purposes and for labor cost, either aggregation                                                      are calculated for the depreciation period. As for the
of balances or apportionment aggregation is used. For                                                              environmental improvement measures without facilities, the
example, the environmental conservation cost calculation                                                           effects are the difference from the cost in the previous year
method for a production facility would be as follows: {(total                                                      (the balance between the cost in the previous year and the
amount of investment) - (cost of investment for facility if not                                                    cost in this year when the improvement measures are not
used for energy conservation)} / (total amount of investment)}                                                     implemented). For the present time, however, because of the
= “coefficient of degree of influence on the environment.” This                                                    difficulty in estimating clear-cut figures, the economic effects
coefficient will be used to multiply the applicable depreciation                                                   in those categories, such as contributions to the value added
cost as well as the maintenance costs to calculate the costs                                                       to products and the effect of risk avoidance (avoiding costs of
for environmental conservation.                                                                                    indemnity and compensation), will not be ascertained.

●Economic Effects

To calculate the economic effects associated with                                                                        Future Issues
environmental measures, FHI based its calculations on the                                                          1) Consider the optimal environmental efficiency indicators
guidelines released by the Ministry of Environment in addition                                                          and environmental management indicators
to incorporating its own calculation methods.                                                                      2) Improve calculation precision and efficiency of calculation
Specifically, the effects are calculated for each cost category.                                                        work
For example, the effect of reducing waste disposal costs (the                                                      3) Promote the greater use of environmental accounting in
cost of waste disposal is being reduced by restraining the                                                              each department

                      Economic effects                                                                                                   Environmental performance (physical effects)
                                                               Amount ( million)                                                                                 Comparison
                           Details                                                                  Category                      Unit           Fiscal 2001      with Fiscal     Fiscal 2000     Fiscal 1999
                                                              Fiscal 2001 Fiscal 2000                                                                                2000

                                                                                        Amount of waste material                  ton                     697           -2,541           3,238           7,068
Reduced costs through waste reduction and disposal                                      generated
method improvement                                               497                    Amount of waste material                  ton                     523             -401             924           3,042
Realized profit from the sales of valued materials obtained                  765        discharged
through recycling                                                                       Amount disposed of at landfill            ton                      42             -252             294           1,830

                                                                                        Energy usage per value of production kl/ 100 million            15.55            -1.09           16.64           16.58
Reduced energy costs                                             157          68
                                                                                        Amount of CO2 emissions             thousand ton-C               69.8             -5.7            75.6            74.8

                                                                                        Amount of PRTR chemicals                  ton                   3,851             232            3,619              __
Reduced costs by using substitutes for cleansing agents                                 used✽1
(chemical agents)                                                 8            7                                                                                                                            __
                                                                                        Amount of PRTR chemicals                  ton                   1,500             -120           1,620
                                                                                        emissions moved

Reduced the volume of paint and solvent used                     273                    Amount of VOC emissions                   g/m2
                                                                             289        (from automobiles only)                                            52             -6.0              58              68

                                                                                        Amount of discharged CFCs
Reduced purchasing costs by reusing recovered air                                       alternatives                               ton                     0.2             -0.8            1.0              2.9
conditioner refrigerants, others                                  5            3                                                (ton-C)
                                                                                        In parentheses are equivalent                                     (75)          (-278)           (353)          (1,028)
                                                                                        amount in CO2 ✽2

Total savings from environmental impact reduction effects        939        1,133
                                                                                            Note 1: As the tenth was rounded off, some figures in the total are not the exact sum.
                                                                                            Note 2: Economic effects were not calculated in the fiscal 1999.
                                                                                            ✽1: The figures in the table are the aggregate amount of the type I designated chemicals whose annual amount
                                                                 __           __                used exceeds 5 tons (0.5 ton for the specific type I chemicals). Although there are data for fiscal 1999, they
(N/A)                                                                                           are not shown here because the definition for calculation is a little different.
                                                                                            ✽2: The equivalent amount was calculated by multiplying the amount of HFC emissions by the global warming

Total savings from investment (N/A)                               0            0

Reduced costs by changing raw materials
Reduction in raw material procurement costs through the          37           83
use of recycled materials

                                                                 976        1,215

                       Environmental Management

   6 Life Cycle Assessment
                                                                                                   Acquiring natural resources
The automobile is an essential tool for everyday life. Nevertheless,
they are also the cause of environmental problems such as ozone
depletion, global warming and air pollution. Currently a new method                                Manufacturing raw materials

“Life Cycle Assessment (LCA)”, which quantifies and evaluates the

                                                                                                                                                                                                 Activities for improvement
                                                                                                                                                                       Analysis and evaluation
environmental impact of each stage or part during the life cycle of a                                Manufacturing parts

product (acquiring resource materials -> manufacturing -> using ->
disposing), is being researched in various fields.                               Input              Building automobiles                              Outnput
FHI participates in the LCA research by Japan Automobile
Manufacturers Association. Since 1997, FHI‘s technology divisions               Natural resource
                                                                                                    Utilizing and doing maintenance
                                                                                                                                                    Air pollutants
                                                                                Energy                                                              Water pollutants
have worked on creating calculation software, collected company                 Water                                                               Waste materials

data, and researched on the influence of material difference on the             substances
                                                                                                   Dismantling and demolishing
environmental impact. In April 2002, FHI established “LCA
utilization commission” and started its activities in order to utilize
the LCA as one of the developmental tools for having an LCA
educational campaign and establishing the LCA method.

   7 Environmental Education
To promote a deeper awareness of its environment-related activities, FHI provides education for different levels of employees, ranging
from new employees to top management; it also provides these employees with education and training based on environmental
management systems. In addition, we utilize all opportunities to carry out instructive activities. In the fiscal 2001, we serialized feature
articles on our effort and social trend for the environment, titled as “Introduction to Ecology” in our monthly company magazine “Shuho”
for one year.
     Training of Internal Environmental Auditors                                       Instructive Activities through Presentations and Lectures on Environmental Conservation Activities
FHI has a program to train internal environmental auditors                       In fiscal 2001, the Gunma Manufacturing Division held a lecture
(qualification in FHI), who audit the status of implementation                   in June (environment month), inviting Mr. Umeda, Environmental
of EMS in the office in each manufacturing office. In fiscal                     General Manager of Ebara Corporation. The Utsunomiya
2001, 72 employees were qualified as an internal                                 Manufacturing Division implemented an Environmental Case
environmental auditor throughout the company. There is also                      Study Presentation in September and February. The Gunma
a follow-up education program for the current auditors if                        Manufacturing Division too held its seventh Energy Conservation
needed. Some employees from our affiliated companies                             Case Study Presentation in March.
joined the program.
                                        Education for internal environmental
                                        auditors in Gunma Manufacturing
                                        Division, which was held from May 31
                                        to June 1, 2001.

                                                                                                                                                  Energy Conservation Case
                                                                                                                                                  Study Presentation
                                                                                                                                                  (Gunma Manufacturing Division)
     Emergency Response Drills Based on the EMS
                                                                                 FHI also recycled plastic caps, which were attached to the
FHI provides training to prevent and minimize the
                                                                                 automobile parts for protection at the time of supplying the
environmental impact of accidents or emergencies in each
                                                                                 parts, as a raw material of “Clear holder”. In addition, we used
division so that the employees can respond appropriately.
                                                                                 cups with a logo to promote environmental conservation at
Each department is responsible for providing necessary
                                                                                 drink vending machines installed in all the divisions including
environmental conservation education for contractors and
                                                                                 the head office, in cooperation with the suppliers.
suppliers entering the Company’s premises.

Drill to respond to chemical leak               Education for contractors and
from a tank filler nozzle (Utsunomiya           suppliers (Gunma
Manufacturing Division)                         Manufacturing Division)
                                                                                                Clear holder                                              Cup with a logo
                                                                                               Environmental Management

  8 Environmental Incidents
   Environment-related Data
In fiscal 2001, FHI received five complaints about noise and                  measure was taken. Utsunomiya Manufacturing Division
vibration. One of these occurred at the Gunma                                 received a complaint about painting odor in the
Manufacturing Division because the roof fans were in                          Transportation and Ecology Systems Division, for which we
operation even after the normal shutdown time. We                             immediately improved the working environment.
immediately implemented work improvements. Complaints                         Data concerning each plant’s exhausts and drainage is
were also received about vibrations at the demolition work at                 included on pages 49-51.
old facilities in the Aerospace Division, about noise
generated from compressors and about noise from horn                             Product Recalls
blaring as a signal for testing garbage trucks in the                         In the fiscal 2001, there were no environment-related recalls
Transportation and Ecology Systems Division. Improvements                     of products.
were made immediately. We also immediately responded to
the other two complaints by making the necessary                                 Others
improvement of the facilities and changes in the construction                 We transferred the functions of the Omiya Manufacturing
methods.                                                                      Division, the main plant for the Industrial Products Division, to
Five complaints were also received about offensive odors                      the Saitama Plant in Kitamoto City. Subsequently, FHI has
and mist. Gunma Manufacturing Division responded to a                         worked to develop the resulting vacant land in Omiya. As part
complaint from the local people living 200 meters away from                   of these efforts, since 1997 FHI has been purifying
the plant by changing the catalyst of deodorizing equipment                   contaminated soil and groundwater, trichloroethylene used to
of exhaust gas from the painting process. There was also a                    wash parts was detected primarily in the vicinity of washing
complaint about paint mist from the construction work of a                    facilities. This purification work achieved the environmental
building near the border of the plant at the Gunma                            standards in all the checking points in March 2002. We
Manufacturing Division. An immediate action of preventative                   continue to monitor the site.

  9 Communication
FHI has set up contact points to maintain communication with local residents and distributes environmental information in the manner
shown below. FHI also introduces its approach to environmental conservation on its Web site (

                                               Information on                    Manufacturing Division
                                               Car Types                         Newsletter
                                                                Company in-
     Environmental Report                                       house
                                                                newsletter                                       International Photo News (for
                            Company Brochure                    “Shuho”                                          elementary and junior high

10 Change in Land Use Status
FHI expanded the green zone by planting trees in the plant
site of 2200 m2, since we built a plant to produce automobile
repair parts at the Bus Manufacturing and House
Prefabricating Division in the fiscal 2001.

                     Environmental Management

11 Overall Achievements in Fiscal 2001 and Fiscal 2002 Goals

     Environmental Management
                                                      Fiscal 2001
                                                                                                                                               Fiscal 2002 goals
                      Goals                                                     Achievements
                                                                                                                                Firmly establish and improve environmental
 Firmly establish and improve environmental                ●
                                                               Implemented Environmental Risk Assessment at all
                                                                                                                                management activities
 management activities                                         divisions                                                        ●
                                                                                                                                 Respond to evaluations for recertification of ISO
  Implement Environmental Risk Assessment                  ●
                                                               Gunma Manufacturing Division was evaluated as
                                                                                                                                 14001 (Saitama Manufacturing Division and
  Respond to evaluations for recertification of ISO            implementing and maintaining EMS and renewed the
                                                                                                                                 Transportation and Ecology Systems Division at
  14001 (Gunma Manufacturing Division)                         certification
                                                                                                                                 the Utsunomiya Manufacturing Division)

 Issue 2001 Environmental Report (report of fiscal                                                                              Enhance contents in the 2002 Environmental
                                                           Issued 2001 Environmental Report by the target date (June)
 2000 environmental achievements) by the target                                                                                 Report (report of fiscal 2001 environmental
                                                           Its English version was also issued
 date                                                                                                                           achievements)

 Publicly announce environmental accounting                Publicly announced FHI’s environmental accounting                    Put together and compile achievements of
 economic effects in its 2001 Environmental Report         economic effects in its 2001 Environmental Report                    affiliated companies in environmental fiscal 2001

● Development Process and Products
                                                                            Fiscal 2001
       Category                                                                                                                                     Fiscal 2002 goals
                                                  Goals                                           Achievements
                                   Continue fuel economy improvement            ●
                                                                                    Improved fuel economy in all models
                                   in every full model change and annual        ●
                                                                                    Met fiscal 2010 fuel standards at 2 ranks out of 5
 Fuel economy                      model change                                                                                           Implement as planned
                                                                                    for passenger vehicles and at 6 ranks out of 6
                                   Advance achievement of fiscal 2010
                                                                                    for mini-sized trucks
                                   standards in fiscal 2006

                                   Introduce Excellent Low Emission
                                   Vehicles (E-LEVs) or Good Low
                                   Emission Vehicles (G-LEVs) for all the
                                                                                Switched to E-LEVs and G-LEVs in all models
 Exhaust                           models except some by autumn 2002
                                                                                except for Sambar mini-sized truck MSC. Impreza           Implement as planned
 emissions                     ●
                                   Start introducing Ultra Low Emission
                                                                                2L Turbo is compliant with 2000 regulation
                                   Vehicles (U-LEVs) in 2003 and use
                                   them in 80% of all the vehicles by

                                                                                Reduced noise levels of each part of fully-               Further reduce noise levels for all noise
                               Further reduce noise levels for all noise
 Noise                                                                          changed model of Forester and improved Impreza            sources in vehicles for further reduction
                               sources in vehicles
                                                                                Turbo                                                     of environmental noise

                                                                                    Hybrid vehicles:                                      ●
                                                                                                                                              Hybrid vehicles:
                                   Hybrid vehicles:                                 Advanced development of compact car-base
                                                                                                                                              Advance development as planned
                                   Introduce into the market by fiscal 2006         hybrid vehicles based on field data of Pleo Nesta     ●
                                                                                                                                              Natural gas vehicles:
                                   Natural gas vehicles:                            Hybrid
 Clean energy                      Limitedly introduce Legacy B4 CNG in         ●
                                                                                    Natural gas vehicles:
                                                                                                                                              Limitedly introduce into market in
 vehicles                                                                                                                                     October
                                   autumn 2002                                      Advanced development of Legacy B4 CNG                 ●
                                                                                                                                              Fuel cell vehicles:
                                   Full cell vehicles:                          ●
                                                                                    Fuel cell vehicles:
                                                                                                                                              Continue research and development
                                   Develop for the next generation                  Considered hybridization of fuel cell and
                                                                                                                                              for future practical application
                                                                                    secondary battery

                                                                                                                             Environmental Management

● Production Stage Category
                                                                             Fiscal 2001
         Category                                                                                                                                   Fiscal 2002 goals
                                                  Goals                                           Achievements
                                    Amount of waste generated:                   ●
                                                                                     Amount of waste generated:                           ●
                                                                                                                                              Amount of waste generated:
                                    Reduce waste generation by 96%                   Reduced waste generation by 97% compared with            Reduce waste generation by 99%
                                    compared with fiscal 1990 levels                 fiscal 1990 levels                                       compared with fiscal 1990 levels
     Waste reduction            ●
                                    Amount of waste discharged:                  ●
                                                                                     Amount of waste discharged:                          ●
                                                                                                                                              Amount of waste discharged:
                                    Reduce waste discharge by 96%                    Reduced waste discharge by 96% compared with             Reduce waste discharge by 98%
                                    compared with fiscal 1990 levels                 fiscal 1990 levels                                       compared with fiscal 1990 levels
                                                                                                                                              Improve consumption rate by over 1%
                                    Reduce energy consumption rate by            ●
                                                                                     Improved energy consumption rate by 6.6%                 compared with fiscal 2001
         Energy                     more than 1% compared with fiscal                compared with fiscal 2000                            ●
                                                                                                                                              Work to meet painting VOC emissions
       conservation                 2000                                         ●
                                                                                     Reduced CO2 emissions by 7.6% compared with              reduction standard (reduction by 6%
                                    Reduce CO2 emissions                             fiscal 2000                                              compared with fiscal 1990 by fiscal

  Substances with              Reduce painting VOC emission                      Reduced painting VOC emission amounts (unit              Work to achieve painting VOC emission
environmental impact           amounts (unit per area) by 49%                    per area) by 53% compared with fiscal 1995,              reduction standard (reduction to
[Automobile Division]          compared with fiscal 1995 levels                  down to 52g/m2                                           below 45g/m2 by fiscal 2006)

Reduction in emissions          Reduce HFC134a (CFC alternative)
                                                                                 Reduced HFC134a emissions volume (per
                                emissions volume (per vehicle) on                                                                         Work to maintain collection equipment
  of CFC alternatives                                                            vehicle) on automobile production line by 97% of
                                automobile production line by over 90%                                                                    on the production line
 [Automobile Division]                                                           fiscal 1996 levels
                                of fiscal 1996 by fiscal 2005

                                Automobile Division:                             Automobile Division:                                     Automobile Division:
                                Aim at establishment of EMS at                   181 out of 289 suppliers established EMS as              Establish EMS (Phase IIl standard) at
                                suppliers by March 2003 and achieve              targeted (Phase II standard) as of March 2002            all suppliers by March 2003 (ultimate
Green procurement               second stage (Phase II standard) by                                                                       goal)
                                March 2002                                       Industrial Products Division:
                                Industrial Products Division:                    Explained FHI’s guidelines to approximately 110          Continuously expand green
                                Commence green procurement                       suppliers in April 2001                                  procurement

● Recycling
                                                                             Fiscal 2001
         Category                                                                                                                                   Fiscal 2002 goals
                                                  Goals                                           Achievements
                                                                                 New-model Forester -
                                                                                  Reduced component parts of headlights. Also
                                    Develop technologies for easier                                                                       ●
                                                                                                                                              Continue to develop technologies for
                                                                                  reduced the number of fastening points (number
         Improve                    dismantling
                                                                                  of bolts) of mud guards, roof rails, undercovers            easier dismantling
       recyclability            ●
                                    Develop technologies to expand the                                                                    ●
                                                                                                                                              Promote further expansion of the use
                                    use of PP-grade integral materials                                                                        of PP-grade integrated materials
                                                                                  Adopted PP-grade integrated materials for
                                                                                  bumper and about 70 interior plastic parts

                                                                                 Established evaluation system based on new
                                Implement evaluations based on                                                                                Implement evaluations for future new
                                                                                 international standards (ISO standards) and              ●

     Recyclability rate         international standards that are
                                                                                 evaluated automobile models such as new                      models as regular operation
                                currently under examination

                                                                                                                                          Work to increase the number of used
                                Work to increase the number of used              Collected 37,100 used bumpers, an 8% increase            bumpers collected (increase collection
 Recycling volume               bumpers collected                                compared with fiscal 2000 levels                         ratio to the number of repaired bumpers
                                                                                                                                              Promote development of technologies
                                    Promote development of technologies          Used lead-free fuel tanks, fuel hoses,                       for the replacement of lead and
                                    for replacement of lead                      electrodeposition paints, glass ceramic prints, and          continue to consider further reduction
     Substances with            ●
                                    Keep lead levels one- third of 1996          wheel balance weights for new Forester, and                  of usage
      environmental                 levels and consider further reductions       achieved lead levels below one-seventh of 1996           ●
                                                                                                                                              Promote development of technologies
         impact                     in the volume of lead used                   levels
                                                                                                                                              for the replacement of hexavalent
                                                                                                                                              chrome and consider its application to
                                                                                                                                              automobile products
                                                                                     Implemented management chart under new
                                                                                     manifest system at all dealerships
                                Thorough implementation of new                                                                            ●
                                                                                                                                              Firmly establish new manifest system
        Sales and               manifest system (mandate confirmation
                                                                                     Commenced collection and disposition of              ●
                                                                                                                                              Promote installation of CFC collection
         services               for all ultimate disposal contractors)               warning flares
                                                                                     Develop installation of CFC collecting equipment
                                                                                     (for both CFC12 and HFC134a) to dealerships

● Logistics
                                                      Fiscal 2001
                                                                                                                                               Fiscal 2002 goals
                       Goals                                                     Achievements
 Promote efficiency of logistics and restraint of         ●
                                                              Reduced the amount of packing materials in shipping
 wastes generated
                                                              automobile repair parts
  Restrain generation of packing material wastes                                                                                Further reduce environmental impacts in logistics
                                                              Enforced energy-saving driving in transporting completed
  Further promote rationalization of transportation
                                                              automobiles and promoted educational campaigns
  of completed automobiles

  1 Development Process and Products                                                                                          Automobile-related Products

     Fuel Economy
When motor vehicles consume fuel, they emit carbon dioxide (CO2) in proportion to the amount of fuel. Improving fuel economy can
contribute to preventing global warming, which is caused by heat-trapping substances including CO2, as well as saving limited energy
resources. Subaru promotes the development of technology to improve fuel economy while taking advantage of features such as all-
wheel drive (AWD) and high power engine, and produces cars that meet the fiscal 2010 fuel economy standards, which is a fuel
economy target for gasoline-powered vehicles, into the market in sequence.

   Improved Fuel Economy in the New "Forester"
All models of the new "Forester", which came into the market in 2001,
meet the fiscal 2010 fuel economy standards.

Details of the technology to improve fuel economy (turbo engine
automatic transmission (AT) vehicle)
                                                                                                                                                            New model of
  ●Engine Improvements                                                                                                                                      the Forester
     ●   A compact and high-efficiency turbocharger is adopted.
                                                                                                                                                          2000 model
     ●   Variable valve timing (AVCS) and low-idling revolutions are
                                                                                           Fuel Economy of the New Forester                                (old Forester)
         adopted.                                                                                                                                         2001 model
     ●   Various means to reduce friction are taken.                                       (km/l)                                                          (new Forester)
  ● Improving Drive-Train Efficiency                                                                        13.6
     ●   Slip lock-up control for torque converter lock-up are adopted.                                                    13.0                 13.0               13.0
     ●   A neutral control system✽1 is adopted.                                                                    12.6
     ●   Econo mode✽2 is adopted
     ●   Various means to reduce loss at the shift mechanism are taken.                                                                  11.6
  ●Reduced weight and running resistance
     ●   A light-weight aluminum front hood, front bumper beam, and roof                                                                                   10.6

         rails are adopted
     ●   High-tension steel sheets are used for body parts
     ●   Rolling resistance of the tire is improved                                             0
                                                                                                        4WD-MT            4WD-AT            4WD-MT             4WD-AT
     ●   Air resistance is improved by adopting air flaps for the front of
                                                                                                               2L engine                         2L turbo engine
         front wheels.

   Improved Fuel Economy in the Annual Improvement of the Legacy, Impreza, Pleo, and Sambar
The fuel economy was also                       Ratio of the Cars that Meet the Fiscal 2010 Fuel Economy Standards in the Market                          2000 model
improved intensively in the annual                                                                                                                        2001 model
                                             Note:The figures in red indicate the fuel economy improvement
improvement of the models in 2001.                in the 2001 model to the 2000 model.
                                                                                    0.2-2.4km/l                                    0.2-0.8km/l         1.0-1.2km/l
The chart on the right shows the                                                         100    0-0.6km/l                                100            100 100
ratio of the vehicles (calculated by                                                                        88
the volume of shipments) which                 80
meet the fiscal 2010 fuel economy                      0-0.6km/l
standards for the models that came             60
into the market as an annual-                                                                                                       43
changed model or a fully-changed               40
                                                        29                   29
model in 2000 and 2001, and the
fuel economy improvement for each                                                                                   0.4km/l
model.                                                                                                               0      0
                                                        Legacy         Impreza       Forester           Pleo       Sambar wagon Sambar van,             Pleo van
                                                                                  Passenger cars                                       Mini-sized trucks

                                    ✽1 Neutral control system: A system that automatically shifts into neutral if the brake pedal is pressed when the car is stopped
16                                  ✽2 Econo mode: An economical mode that sets the upshift point (engine speed) low to reduce engine speed when the Ecoswitch is on
                                                                                                                                                                                  Fiscal 2001 Program Achievements

                       Trends in Average Fuel Economy by Equivalent Inertia Weight [Gasoline Passenger Cars]                                    Trends in Average Fuel Economy by Equivalent Inertia Weight [Gasoline Mini-sized Trucks]
In an effort to meet the fiscal 2010 fuel economy standards,                                                                          The target value was achieved in all the equivalent inertia
we successfully achieved the target in two ranks (875 kg and                                                                          weights in both manual transmission (MT) vehicles (three
1,750 kg) out of five ranks of equivalent inertia weight, but                                                                         ranks) and automatic transmission (AT) vehicles (three ranks).
failed to reach the target in the other three ranks (1,000 kg,
1,250 kg, and 1,500 kg). For the 1,000 kg rank, we met the
standard in fiscal 2000, but we fell short, only slightly, due to                                                                         Trends in Average Fuel Economy for MT vehicles
the fluctuation of shipment distribution ratio in fiscal 2001.                                                                                                                                   Achieved values in fiscal 2001 are in parentheses.
      Trends in Average Fuel Economy by Equivalent Inertia Weight [Gasoline Passenger Cars]

                                                                                                                                           10-15 mode fuel economy
             (km/l)                                             Achieved values in fiscal 2001 are in parentheses.
               22                                                                                                                                                    19       750kg structure A
                                                                                             (21.85)        21.2
 10-15 mode fuel economy

                           20                                                                                                                                                                                                                         18.0
                                       750kg                                                                18.8                                                               875kg
                                                                                                                                                                          structure A                                               (16.82)           17.0
                           18                                                                               17.9                                                     17                                875kg structure B
                                       875kg                                                                                                                                                                                                          16.7
                           16                                                                               16.0                                                                    750kg structure B                               (16.65)
                                                                                                                                                                                                                          1000kg                      15.5
                           14                                                                (15.19)                                                                 15
                                      1000kg                                                                13.0
                                      1250kg                                                 (12.01)
                                                                                                            10.5                                                     13
                                      1500kg                        1750kg                   (10.61)                                                                      '9 5       '9 6     '9 7     '9 8      '9 9       '0 0     '0 1 Target value
                                  8                                                                                                                                                                                          Fiscal Year      for fiscal
                                      1750kg                                                                                                                                                                                                      2010
                                      '9 5       '9 6      '9 7      '98     '99      '00      '01      Target value
                                                                                        Fiscal Year    for fiscal 2010
                                                                                                                                              Trends in Average Fuel Economy for AT vehicles
                                                                                                                                                                     (km/l)                      Achieved values in fiscal 2001 are in parentheses.
                       Trends in Attainment Rates for Fiscal 2010 Fuel Economy Standards                                                                                                       875kg structure A
                                                                                                                                          10-15 mode fuel economy

                                                                                                                                                                     19                                                                               18.9
 Trends in Attainment Rates for Fiscal 2010 Fuel Economy Standards                                         Trucks
                                                                                                           Passenger                                                                750kg structure A
                                     (%)                                                                   cars
                                   100                                                                                                                               17

                                      80                                                                                                                                         875kg structure B                                                    15.5
                                                                                                                                                                     15                                                              (15.64)          14.9
                  Vehicle ratio

                                      60                                                                                                                                             1000kg
                                                                                                                                                                          '9 5       '9 6     '9 7     '9 8      '9 9       '0 0     '0 1 Target value
                                      40                                                                                                                                                                                     Fiscal Year      for fiscal


                                              '95         '96        '97      '98      '99       '00        '01
                                                                                                        Fiscal Year
                           Note:The vehicle ratio is calculated by the volume at the time of shipment.

 Reference Fiscal 2010 fuel economy standards (10-15 mode fuel economy)
   Gasoline Passenger Cars
                                                    Equivalent inertia weight (kg)                         -750          875      1000                                1250           1500            1750          2000            2250               2500-
                                                 Vehicle weight (kg)                  lower limit            |           703       828                                1016           1266            1516          1766            2016               2266
                                                                                      upper limit           702          827      1015                                1265           1515            1765          2015            2265                 |
                                           Fiscal 2010 fuel economy standards (km/ l )                      21,2         18.8     17.9                                16.0           13.0            10.5           8.9             7.8                6.4

                                                                                                                                                                                                      Note: 'Structure A' indicates the structure that falls into
      Gasoline Mini-sized Trucks                                                                                                                                                                      the following two categories (excluding trucks). The
                                                                                                                                                                                                      Pleo vans are in this category among the Subaru
                                                 Equivalent inertia weight (kg)                                 -750                     875                                          1000-           products.
                                                                                         lower limit              |                      703                                           828            1) Maximum load capacity / gross vehicle weight 0.3
                                                 Vehicle weight (kg)                                                                                                                                  2) FWD (front-wheel drive) vehicles or FWD-based
                                                                                         upper limit             702                     827                                            |                4WD vehicles
                                                         Vehicle structure                             Structure A Structure B Structure A Structure B                                 __
                                                                                                          18.9        16.2        16.5        15.5                                     14.9           Vehicles other than in the Structure A fall into 'Structure
                                                                                             AT                                                                                                       B'. The Sambar van and trucks are in this category
                                  Fiscal 2010 fuel economy standards (km/ l )
                                                                                             MT           20.2        17.0        18.0        16.7                                     15.5           among the Subaru products.

                          Fiscal 2001 Program Achievements

                    Exhaust Emissions
Substances such as carbon monoxide (CO), hydrocarbon (HC), nitrogen oxides (NOx), which are emitted from automobiles, are one of
the causes of air pollution in metropolitan areas where there is intensive motor traffic. In order to improve the state of the air, Subaru
produces low emission vehicles (approved by Ministry of Land, Infrastructure and Transport) that meet the standard stricter than the
regulation into the market in sequence.

        Exhaust Emission Countermeasures for Passenger Cars                                                                                                                                                                                                             Exhaust Emission Countermeasures for Mini-sized Trucks
In fiscal 2001, we applied the exhaust emission                                                                                                                                                                                                        In fiscal 2001, we modified the exhaust emission
countermeasure technology of the excellent low emission                                                                                                                                                                                                countermeasure technology of the good low emission
vehicles and good low emission vehicles, that was put into the                                                                                                                                                                                         vehicles, which was put into the market in the previous fiscal
market in fiscal 2000 for the first time, to the annually-changed                                                                                                                                                                                      year, for mini-sized passenger cars, and put it into the
models of the Legacy, Pleo, and Sambar wagon, and to the                                                                                                                                                                                               annually-changed models of the Sambar van, truck and the
fully-changed model of the Forester.                                                                                                                                                                                                                   Pleo van as excellent low emission vehicles.

        Application Status of Low Emission Vehicles
The table below shows the status of applying low emission vehicles to the annually-changed models and fully-changed models in fiscal
2000 and fiscal 2001.
  Application Status of Low Emission Vehicles
Classification                                            Model                                                    Engine                                                                2000 model                                                                             2001 model
                                                                                                            2L                                                                  Good low emission vehicle                                                           Good low emission vehicle
                                                                                                            2L Turbo                                                            1978 regulation                                                                     Good low emission vehicle
                                                                                                            2.5L                                                                1978 regulation                                                                     Good low emission vehicle
                                                                                                            3L                                                                  Excellent low emission vehicle                                                      Excellent low emission vehicle
                                                                                                            1.5L                                                                Excellent low emission vehicle                                                      Excellent and Good low emission vehicle
                                                                                                            2L                                                                  Good low emission vehicle                                                           Good low emission vehicle
                                                                                                            2L Turbo                                                            Good low emission vehicle                                                           Good low emission vehicle
 Passenger                                                                                                  2L Turbo Sti                                                        2000 regulation                                                                     2000 regulation
   cars                                                                                                     2L                                                                  1978 regulation                                                                     Good low emission vehicle
                                                                                                            2L Turbo                                                            1978 regulation                                                                     Good low emission vehicle
                                                                                                            NA                                                                  Good low emission vehicle                                                           Good low emission vehicle
                                                                                                            Mild MSC                                                            Good low emission vehicle                                                           Good low emission vehicle
                                                                                                            MSC (SOHC)                                                          1978 regulation                                                                     Excellent low emission vehicle
                                                                                                            MSC (DOHC)                                                          1978 regulation                                                                     Good low emission vehicle
                                                                                                            NA                                                                  1978 regulation                                                                     Good low emission vehicle
                         Sambar wagon
                                                                                                            MSC                                                                 1978 regulation                                                                     Good low emission vehicle
                                                                                                            NA                                                                  1998 regulation                                                                     Excellent low emission vehicle
 Mini-sized              Sambar van, truck
                                                                                                            MSC                                                                 1998 regulation                                                                     1998 regulation
                         Pleo van                                                                           NA                                                                  1998 regulation                                                                     Excellent low emission vehicle

        Trends in the Number of Types Designated by Seven Prefectures and Cities in Kanto area and approved by Ministry of Land, Infrastructure and Transport.

 Trends in the Number of Low Emission Vehicle Types Designated by Seven Prefectures and Cities in Kanto Area and Approved by Ministry of Land, Infrastructure and Transport
                                                                            Number of types designated by seven                                                                                                                   Number of types approved by Ministry
                                                                            prefectures and cities in Kanto area                                                                                                                  of Land, Infrastructure and Transport
                                                                                                                                                           Deregulation due to the strengthened designation standard
  Number of types




                          1st (07/1996)

                                          2nd (11/1996)

                                                            3rd (03/1997)

                                                                            4th (07/1997)

                                                                                            5th (11/1997)

                                                                                                                               7th (07/1998)

                                                                                                                                               8th (11/1998)

                                                                                                                                                                                   10th (07/1999)

                                                                                                                                                                                                    11th (11/1999)

                                                                                                                                                                                                                     12th (03/2000)

                                                                                                                                                                                                                                      13th (07/2000)

                                                                                                                                                                                                                                                       14th (11/2000)

                                                                                                                                                                                                                                                                          15th (03/2001)

                                                                                                                                                                                                                                                                                           16th (10/2001)

                                                                                                                                                                                                                                                                                                            17th (03/2002)
                                                                                                                                                                9th (03/1999)
                                                                                                               6th (03/1998)

                                                                                                                                                                                                                                                                                                                             Note: When a part of the model
                                                                                                                                                                                                                                                                                                                                   is subject to designation,
                                                                                                                                                                                                                                                                                                                                   it is counted as 0.5.
                                                                                                                                                                                                                     Designated time, month and year

                                                                                                                                  Fiscal 2001 Program Achievements

   Trends in NOx Averages
By putting the low emission vehicles designated by the seven
prefectures and cities in Kanto area and approved by Ministry                                             Trends in Average NOx Emissions for Subaru Vehicles
of Land, Infrastructure and Transport into the market, the                                                 (g/km)
average amount of NOx emitted by Subaru vehicles is                                                       0.35

decreasing every year, as the chart on the right shows.                                                   0.30


                                                                                            Average NOx




                                                                                                                        1997       1998           1999            2000             2001 Fiscal Year
                                                                                           Note:1) The figures were calculated from the regulated values (10-15 mode) at
                                                                                                    the time of shipment.
                                                                                                2) The figures for the low-pollution vehicles designated by the seven
                                                                                                    prefectures and cities in Kanto area were calculated by using the
                                                                                                    designated standard values.
                                                                                                3) The figures after the deregulation due to the strengthened designated
                                                                                                    standard were calculated using the standard values at the time of

                      The regulated values of exhaust emissions standards designated by the seven prefectures and cities in Kanto area,
                      and standards for accreditation for low emission vehicles by the Ministry of Land, Infrastructure and Transport
   Gasoline and LPG Passenger Cars
                                                                     10-15 mode(g/km)                      11 mode(g/km)
                                                                CO          HC      NOx    CO                     HC       NOx
         1978 Exhaust Emission Regulations                      2.10      0.25      0.25   60.0                  7.00      4.40
  Standard designated by seven prefectures and cities            ↑         ↑        0.12    ↑                      ↑        ↑                 Application ended at the end of March 2000
         2000 Exhaust Emission Regulations                      0.67      0.08      0.08   19.0                  2.20      1.40
                              Good low pollution vehicles                 0.06      0.06    ↑                    1.65      1.05    Ministry of Land, Infrastructure and Transport Good low emission vehicle
  Standard designated by
                             Excellent low pollution vehicles    ↑        0.04      0.04    ↑                    1.10      0.70    Ministry of Land, Infrastructure and Transport Excellent low emission vehicle
seven prefectures and cities
                             Ultra low pollution vehicles        ↑        0.02      0.02    ↑                    0.55      0.35    Ministry of Land, Infrastructure and Transport Ultra low emission vehicle

 Gasoline and LPG Mini-sized Trucks
                                                                     10-15 mode(g/km)                      11 mode(g/km)
                                                                CO         HC       NOx    CO                     HC       NOx
         1990 Exhaust Emission Regulations                      13.0      2.10      0.50   100                   13.0      5.50
  Standard designated by seven prefectures and cities            ↑          ↑       0.25    ↑                      ↑        ↑              Application ended at the end of September 1998
         1998 Exhaust Emission Regulations                      6.50      0.25      0.25   76.0                  7.00      4.40
 Standard designated by seven prefectures and cities             ↑          ↑       0.12    ↑                      ↑        ↑                Application ended at the end of Octber 2001
         2002 Exhaust Emission Regulations                      3.30      0.13      0.13   38.0                  3.50      2.20
                              Good low pollution vehicles        ↑        0.10      0.10    ↑                    2.63      1.65    Ministry of Land, Infrastructure and Transport Good low emission vehicle
  Standard designated by
                             Excellent low pollution vehicles    ↑        0.07      0.07    ↑                    1.75      1.10    Ministry of Land, Infrastructure and Transport Excellent low emission vehicle
seven prefectures and cities
                             Ultra low pollution vehicles        ↑        0.03      0.03    ↑                    0.88      0.55    Ministry of Land, Infrastructure and Transport Ultra low emission vehicle

                                        Fiscal 2001 Program Achievements

Subaru works to reduce the noise generated from the engine, transmission, air-intake and exhaust and tires in order to reduce the
noise of a vehicle. In addition, Subaru also reduces the noise emitted by the rear differential of AWD vehicles. In 2001, Subaru adopted
a large exhaust chamber and a new air-intake system for the fully-changed model of the Forester. Subaru also increased the amount of
undercover sound absorption materials and the capacity of main muffler for the annual-change model of the turbo type of the Impreza
for further noise reduction.

          Main Items for Noise Reduction                         Installation of hood insulator                                                                 Rear differential noise reduction
                                                                                                                                                               • Improved accuracy of gear contact
            Air-intake noise reduction
• Increased volume of air cleaner
• Increased rigidity of air-cleaner case
• Increased rigidity of air-intake chamber
• Installation of resonator

                Engine noise reduction
• Increased rigidity of cylinder block                                                                                                                                           Exhaust noise reduction
• Increased rigidity of oil pan                                                                                                                                                 • Main muffler with increased
• Modification of power-steering pump                                                                                                                                             capacity
  and compressor of air conditioner                                                                                                                                             • Main muffler with variable
                                                                            Transmission noise reduction           Exhaust noise reduction         Tire noise reduction         • Improved internal structure
                             Installation of large engine undercover
                                                                                                                                                                                  of muffler
                                with sound absorption materials
                                                                             • Increased rigidity of case          • Added exhaust chamber
                                                                             • Improved accuracy of gear           • Optimized pipe thickness
                                                                               contact                             • Damped heat shield cover

                Trends in Noise during Driving Acceleration (Domestic/Passenger cars)             Fiscal 1995
                                                                                                  Fiscal 2001
Number of noise categories

                                    Autonomous standard values
                                        (below 75 dB (A))


                             20                                                                                 ✽1 Number of noise categories: Categorized
                                                                                                                   because the same model can be in a
                             10                                                                                    different noise category depending on the
                                                                                                                   engine output and transmission type

                                          73           74              75          76           77   Noise level
                                                                                                     (dB (A))

                              Clean Energy Vehicles
Clean energy vehicles have features such as emitting only little warming substances (CO 2) and air-pollutants (CO, HC, NOx, etc.) and
having less effect on the environment than the gasoline vehicles. However there are technical problems related to price and driving
distances. Subaru has been developing clean energy vehicles that have the features of the gasoline vehicles, such as driving
performance and convenience.

                             Electric Vehicles
Subaru released Sambar EV, a first-generation electric vehicle
(EV) in April 1995, and sold 46 vehicles by March 1999. As for
New Sambar EV, which was released as its successor in
November 2000, eight vehicles were sold by March 2002.
                  In the New Sambar EV, the manual transmission was
abolished, enabling it to be driven like an automatic
transmission vehicle. The new model also has improved
commercial feasibility, such as maximized interior space by
                                                                                                                                                                     Electric vehicle (New Sambar EV)
adopting a small battery.

                                                                                                  Fiscal 2001 Program Achievements

   Hybrid Vehicles
Subaru developed the Pleo Nesta Hybrid as an integrated
                                                                                                                                Hybrid concept
hybrid electric mini car technologies, which it has been                                                                        vehicle with an AWD
developing for the past several years, and started fleet (four                                                                  driving system, HM-
vehicles) testing in the public thoroughfare in October 2000.
Based on this data, Subaru is developing a hybrid vehicle
with improved fuel economy, focusing on a compact-sized
vehicle, and aiming to commercialize it by 2006.
  At the 35th Tokyo Motor Show, Subaru proposed HM-01, a
hybrid concept vehicle with a 4-wheel driving system that
combines the idling stopping system loaded with the 42V
battery and the electric rear driving unit.

   Natural Gas Vehicles
With the advances in the Sambar CNG so far, Subaru
                                                                                                                                Natural gas vehicles,
developed the eco-friendly Legacy B4 CNG that also has the                                                                      Legacy B4 CNG
driving safety of AWD, which is also Subaru's advantage. The
Legacy B4 CNG will be put into the market in October 2002,
although in a limited sale; it is to be operated by people in the
municipal governments and gas companies for data
collection and practicality evaluation.

   Fuel Cell Powered Vehicles
Fuel cells have a large potential as a power source for electric                Technology Development Organization) and worked on
vehicles in terms of the energy efficiency and emissions, but                   hybridization of the fuel cell and secondary battery, as well as
they also have many problems including the size, costs and                      pointing out concrete problems in loading the fuel cell system.
reliability before putting them into practice. Subaru has joined                Subaru continues research and development to solve these
a part of the project by NEDO (New Energy and Industrial                        problems, aiming for the practical application in the future.

     Improving Traffic Flow
   Intelligent Transport Systems (ITS)
The Intelligent Transport Systems (ITS),                                              Telematic system
which enables a safe and comfortable
motorized society with people, automobiles                 GPS satellite

and roads together, has been positively
developed as a trump card for the improved                                                         telecommunication
traffic in the next generation.                                                                          station                   Call center
  In the United States, Subaru released a
telematic system (OnStar ✽1), an advanced
ITS that offers drivers various information                  Onboard system
                                                             • Mobile phone unit
and automatically calls for an ambulance in                  • Voice recognition microphone
                                                             • Emergency switch
emergency such as expanded airbags. The                      • Antenna for GPS and mobile phone
system has been developed as a result of an                  • Airbag unit

alliance with General Motors Corporation.

✽1 OnStar: a telematic system offered by General Motors,
   which is most widely used in North America.                                                     Vehicle with OnStar system

               Fiscal 2001 Program Achievements

  2 Development Phase/Products                                                                                   Products other than Automobiles

     Aerospace Division
The Aerospace Division handles the wind turbine generator systems, which create clean energy using wind, unlimited source of
energy. In November 2000, the division announced the Subaru Small Wind Turbine Generator System. The technologies cultivated
through long years of experience in manufacturing aircraft are used in the aerodynamic design of blades, structures using combined
materials, and computer control system.

   NEDO Advanced Wind Turbine Generator System for Remote Islands Completed
In recent years, Japan has notably increased the amount of wind power
generation introduced. In remote islands that are rich in wind power
resources, however, there is not a sufficient number of wind turbine
generator systems due to the constraints on their natural and
geographical conditions. In order to introduce the wind turbine generator
systems to medium- and small-sized remote islands with weak
construction infrastructure such as roads and port facilities in spite of their
rich wind resources, FHI, commissioned by NEDO in 1999, has
developed an easy-to-build wind turbine generator system with higher
wind-speed-proof performance than the conventional system. In March                                The system was built using a
                                                                                                   mooring winch without a large
2002, two wind turbine generator systems were completed in Izena                                   crane that can not be prepared
                                                                                                   in the remote island.
Island, Okinawa.
This wind turbine generator system is 24m in height, 22m in blade
diameter, 100kW in rated output, and size larger than its predecessor, the
Subaru Small Wind Turbine Generator System (40kW). Using the cutting-
edge multipole synchronous generator, the system can supply stable
electric power in the particular wind condition and electric power
environment of the remote island and resist a powerful typhoon with a
speed of 80m a second. FHI developed the system with the goal of
world's top performance by applying its aircraft designing and developing
technologies. In light of the conditions of the remote island, in addition,
FHI transported by truck and built the system in a special method without
a large crane.
Izena Island, now with two wind turbine generator systems, is a beautiful                           Wind Turbine Generator
                                                                                                    System completed in
remote island 15km around in the coral reef to the northwest of the main                            Izena Island
Okinawa Island. Members of FHI's development staff reside on the island
for testing, aiming to complete the development in March 2003.

   Award-winning Subaru Small Wind Turbine Generator System
Subaru Small Wind Turbine Generator System (40kW) was awarded two
following prizes in the fiscal 2001:
• 2001-2002 Good Design Award
• Fiscal 2001 New Energy Awards "Director-General of the Agency of
 Natural Resources and Energy Award"

The reason for winning the New Energy Award ✽1 includes the excellent
design and contribution to the introduction of wind power generation
system in places such as cities and areas with low wind velocity, which
was thought to be unfit for wind power generation.
                                                                                                   Mr. Hanada, FHI's vice president (middle) and
                                                                                                   development staff at the award ceremony
✽1 New Energy Awards: Awards implemented by the New Energy Foundation for a purpose of promoting
   the development and introduction of new energy equipment and promoting the new energy society

                                                                                                                      Fiscal 2001 Program Achievements

      Industrial Products Division
This division develops and manufactures general-purpose engines, known as the Robin, used in machines that support our life such as
industrial equipment, leisure-related equipment and power generator. In December 2001, FHI announced the new eco-friendly and
people-friendly engines, EX series (EX13, EX17, EX21, and EX27).
The EX engine series are air-cooled 4-stroke inclined OHC ✽1 gasoline engine, that combined even higher outputs and lower exhaust
emission level compared with the conventional OHV ✽2 engine by having an efficient straight air-intake port shape and adopting an OHC
mechanism and a compact combustion chamber with a V-shape valve arrangement for better combustion. The engine is used as a
power source for compact construction machines, portable power generators, compressors and compact agricultural machines.



    Exhaust Emissions                                                                                       Weight Saving and Others
The EX series engines form                                                                               The EX series engines
an efficient air-intake port and                             Comparisons of Exhaust Emissions            adopted an inclined cylinder           Comparisons of Engine
                                                                                                                                                Power per Unit Weight
an efficient pentroof-type                                  12                                           and was designed for weight
                                                                            Exhaust emission                                                 (%)
combustion chamber by                                                       level reduced by             saving and compactness. This              Engine power per unit weight
                                                            10              approx. 20% of the                                                     improved by 15% compared
adopting a one-cam OHC                                                                                   has improved loadability for        120   with the conventional one

                                                                            conventional engine
valve mechanism and realize                                   8                                          many applications. The              110
high output and harmful                                       6
                                                                                                         engine power per unit weight
exhaust emission reduction at                                                                            was improved by 15%                 100

the same time. The engines in                                 4                                          compared with the                    90
the EX series conform to the                                  2
                                                                                                         conventional one by weight
U.S. EPA Phase II regulations                                                                            saving.
and CARB Tier II regulations.                                 0
                                                                     EH25           EX27                                                      70
                                                                                                                                                        EH25         EX27

In the EX series engines, the
                                                            Comparisons of Noise Level
noise level was reduced by               dB(A)
optimization of air-intake and
                                                                         Noise level
exhaust parts. They are also                         77                  reduced by 2dB
people-friendly engines with                                             compared with
                                                                         the conventional
reduced vibration levels and                                             engines

improved operationality.                             75



                                                     72                                                  Combustion chamber of a new design in the EX Series
                                                                  EH25           EX27

✽1 OHC: Over Head Camshaft, which operates a valve by placing the camshaft on the cylinder head
✽2 OHV: Over Head Valve, which operates a valve on the cylinder head with the push rod and rocker arm by placing the camshaft close to the crankshaft

                                  Fiscal 2001 Program Achievements

     Transportation and Ecology Systems Division
The Transportation and Ecology Systems Division has worked on environmental products since 1962, when FHI delivered the first
domestically manufactured refuse collection vehicles to Tokyo Metropolitan Government. In the fiscal 2001, its cumulative production
of refuse collection vehicles reached 50,000. For these years, the division has expanded its range of offerings to include environmental
equipment and facilities that promote the processing and recycling of waste materials. This division is also aggressively developing
new technologies in environmental fields that will contribute to the formation of a sustainable society.

   Development and Sales of Separate Collection Vehicle for Organic Garbage (CVSR)
CVSR is a specialized collection vehicle with a mechanism, which automatically separates expired remaining foodwaste at
convenience stores and supermarkets from its packaging for recycling. The foodwaste separated by CVSR will be recycled into
compost and feedstuff materials.
CVSR boasts a garbage-separating rate as high as 99.6% (in weight; researched and calculated by FHI). By the Food Recycling Law,
which was implemented in May 2001, FHI promotes the reduction of garbage through recycling.

                                                                           Putting in and separating


   CNG Refuse Collection Vehicles production
The volume of shipment of compressed natural gas (CNG)-                   Transporting and emptying
fuelled refuse collection vehicles is increasing every year.
The exhaust emission of CNG is clean.

  CNG Refuse Collection Vehicles Production

     Volume of shipment




                                       1999    2000       2001
                                                           Fiscal year

                                                                                       Fiscal 2001 Program Achievements

   Processing Equipment for Resource Recycling
Hydraulic Drive 2-axis Shearing Crusher (WFKG Series)
This machine crushes bulky refuse, construction debris,
electronic waste and plastic waste by engaging crushing
blades on the two axes. The crusher is used as pre-
processing equipment in places such as a municipal recycle
plaza. As the crushing axes are driven independently by each
                                                                                                                              Hydraulic drive
hydraulic motor, the machine can crush garbage powerfully                                                                     2-axis shearing
and efficiently.
End-of-Life Automobile Pressing Machine (WFJP Series)
This is a large end-of-life automobile pressing machine that
presses and casts end-of-life automobiles with their reusable
parts removed, which are thrown into the machine. Having two
options for compressing, into a cubic shape and into a
stretched sheet, it is indispensable equipment for automobile
recycling at present. The garbage compressed into a cube                                                                      automobile
can be put into the electric furnace and recycled as iron                                                                     pressing
materials. The one compressed into a stretched sheet will be
shredded and recycled after sorted by material.

   Separate Conveyance System for High-rise Apartment Buildings "Fuswton"
FHI delivered Fuswton for general residences in February
2002. The system was named after onomatopoeic
expressions describing a swooshing noise ("Fu", pronounced
"Hugh") and a falling noise ("swton").
  The garbage that is separated and put into a plastic bag
falls through the vertical conveying chute in a manner to which                                               Apartment building
                                                                                                              that introduced
aerodynamics is applied, when put into the input facility on                                                  Fuswton
each floor. It is then accumulated separately by a sorting
machine located on the lowest floor. The vertical delivery is
energy saving, utilizing gravity. In addition, there is no foul
odor generated thanks to a system that allows garbage to be                                         Fuswton

taken out at any time, protecting the residential environment.

     Bus Manufacturing and House Prefabricating Division
The Bus Manufacturing and House Prefabrication Division proposes and builds various prefabricated houses with easiness for assembly
and excellent durability, based on its bus manufacturing technologies. FHI recently released "Yasashii Kazoku" (Sweet Family), a
barrier-free nursing room that can be connected to the main house, in response to the progressive aging of society.

   Container House
Container houses that are widely used as a sectional field office are easy to move and install. They are also used as a rental product.
There are only a few waste materials in dismantling and moving. In fiscal 2001, FHI developed a product with easily recyclable materials
as wall panels and floors so that over 99% of which can be recycled at the time of disposal.

                                                                                                                  Container house
             Fiscal 2001 Program Achievements

  3 Production
     Amount of Input Resources and Emission Matters in Plants
This figure shows the
amount of input                 • Amount of input materials:
                                  367,000 tons                                                                                            (Emission into the atmosphere)
resources and                     Metals such as iron and aluminum                                                                        • Amount of CO 2 emitted: 54,900 tons of carbon
                                  Non-metals such as plastic and                                                                          • Amount of HFC134a emitted: 72 tons of carbon
emission matters in               paint                                                                                                     (Calculated by multiplying amount emitted by global
                                • Amount of Energy consumed:                                                                                warming potential)
fiscal 2001 at the                111,000 kl (crude oil
Gunma Manufacturing             • Amount of water used: 3,980,000m 3                                                                                                 Output
                                                                                                                                                                  Total amount of materials
Division, our main                                                                                                                                                generated: 78,700 tons
automobile production                                   Output                                                                                                    • Amount of materials
                                                                                                                                                                    recycled: 78,600 tons
                                                     (Emission into drainage systems)                                                                             • Amount of waste
plant in Japan.                                      • Amount of water emitted:                                                                                     materials: 56 tons
                                                       3,980,000 m 3✽
                                                                                                                                                                     ✽The   same amount of the water used.

     Reduction of Waste Materials
FHI is actively committed to reducing waste at all its plants. In March 2002, zero emissions with a negligible amount of landfill waste was
achieved at the Utsunomiya Manufacturing Division for aerospace and aircraft, the Utsunomiya Transportation and Ecology Systems
Division for development and manufacturing of railway vehicles and environment-related equipment, and the Saitama Manufacturing
Division for development and manufacturing of general-purpose engines and power generators.
 As the result of these zero emissions activities, the Utsunomiya Manufacturing Division and the Saitama Manufacturing Division shut down
their incinerators and reduced the amount of ash dust and CO 2 emitted in September 2001. (Please see pages 31-34 for more on zero
emissions activities at the Utsunomiya Manufacturing Division.)
                                                                                                            Trends in Amount of Waste Material Generated and Discharged
The Gunma Manufacturing Division for development and
manufacturing of automobiles already achieved zero emissions                       (Thousand tons)
at the end of March 2001. In this division, "the Paint Sludge                                                              21,154 tons (index 100)                                     Amount of waste material generated
Recycling Plant" (please see page 30), which recycles paint                                                                                                                            Amount of waste material discharged
sludge produced during the surfacer process and the top coat
process of car painting into raw materials for vibration
                                                                                                                15                                                                                    523 tons (index 4)
absorption, came on stream in May 2001.
                                                                                                                                                                                    697 tons (index 3)
 In FHI, because of the increase in the amount of recycling, we
succeeded in reducing the amount of waste material generated
                                                                                                                       13,911 tons (index 100)
by 78% and the amount of waste material discharged by 43%                                                       5
compared with the previous year. These figures mean that we
reduced the amount of waste material generated by 97% and the                                                   0
amount of waste material discharged by 96% compared with                                                             '90     '91        '92        '93    '94      '95      '96       '97    '98     '99     '00     '01
                                                                                                                                                                                                                   Fiscal year
fiscal 1990 levels.

     Saving Energy and Resources                                                                   Trends in Amount of CO2 Emitted
                                                                                    (Thousand tons of carbon)                                                                                                         (Index)
Every FHI plant is committed to improving the energy                                   100
                                                                                                                                                   Amount of CO2 emitted
efficiency of facilities to avoid waste or loss of energy. In                                                          100                         Energy use per value of production (fiscal 1990 = 100)
                                                                                                                                                                                                                                 Energy use per value of production

fiscal 2001, we reduced energy use per value of production                                                      90                                                                                                        100
                                                                                        Amount of CO2 emitted

                                                                                                                                              82     83              81       81       82
by 6.6% compared with the previous year, which is a 28%                                                                                                     79                                77      77     78
                                                                                                                80                                                                                                   72 80
reduction compared with fiscal 1990 levels.
 As the result of various measures to save energy and due
                                                                                                                70                                                                                                        60
to the 4.6% decrease in the volume of our automobile
production and the effect of unusually warm winter, the                                                         60                                                                                                        40
company's total amount of CO 2 emissions corresponded to
69,800 tons of carbon in fiscal 2001, which is a 7.6%                                                           50                                                                                                        20
reduction compared with the previous year. This figure is a
6.5% decrease compared with fiscal 1990 levels.                                                                  0                                                                                                        0
                                                                                                                       '90      '91       '92       '93     '94      '95      '96      '97    '98    '99     '00     '01
                                                                                                                                                                                                                   Fiscal year
                                                                                                                               Fiscal 2001 Program Achievements

   Energy-Saving Measures
At the Gunma Manufacturing Division we improved pumps by
incorporating an inverter technology. At the Utsunomiya
Manufacturing Division, we started to divert excess air from
autoclave ✽1 compressors to air for plants, and worked on an
administrative improvement from various angles such as
making a model workplace to save energy in a plant or doing                                           Air Dryer System✽2                                          Diverting excessive air from
                                                                                                      (The Utsunomiya Manufacturing                               autoclave compressors to air for
"Saving Energy Patrol".                                                                               Division)                                                   plants (The Utsunomiya
                                                                                                                                                                  Manufacturing Division)

   Reducing Water Consumption                                                     Trends in Volume of Water Used
In fiscal 2001, the volume of water used in FHI was 5,040,000
                                                                          (Thousand m3)                                              Volume of water used
m3 and we were able to achieve a 5.5% reduction compared
                                                                                                                                     Volume of water use per value of production                          (Index)
with the previous year in the volume of water use per value of                                                 100                   (fiscal 1990 = 100)

                                                                                                                                                                                                                    Volume of water use per value of production
                                                                                                     7,000                                                                                                100
production through the strict maintenance of water pipes and
                                                                              Volume of water used
                                                                                                     6,000                                                    80
energy conservation measures in everyday operations, not                                                                                          80
                                                                                                                                      76                                               72                 80
only because the number of vehicles produced slightly                                                5,000
decreased.                                                                                                                                                                                                60


                                                                                                        0                                                                                                 0
                                                                                                              1990      1995         1996       1997        1998         1999     2000       2001
                                                                                                                                                                         Fiscal year
                                                                                                             Note: There were some mistakes in the graph that showed the volume of
                                                                                                             water used in 2001 Environmental Report. They are modified above.
   An Energy-saving Building Completed
In February 2002, a new building was built in the Yajima Plant in the Gunma Manufacturing Division.
Various energy-saving measures were taken into this building and a photovoltaic device (10KW) was
 Here are some examples of energy-saving measures taken into this building.
• Double windows are installed to improve the adiabatic efficiency.
• Most parts of the offices' exterior walls are paned windows to make the most of daylight in order to
 decrease the number of lights.                                                                                                                                       New Building (The Gunma
• Electric power consumption is reduced through installing low-power lighting equipment and controlling                                                               Manufacturing Division)

 the brightness in the daytime and at night.
 Due to these measures, the lighting system of this building became 49% energy-saving compared
with the standard required by the law concerning the Rational Use of Energy. Besides, the power of the
light in the open space on the ground floor is generated only by clean photovoltaic.
 Water-holding ceramic tiles, recycled tiles whose raw materials are paint sludge produced during car
painting (Please see page 28 of 2001 Environmental Report) are used in paved paths outside this
                                                                                                                                                                      Photovoltaic Generation System

    Management of Chemical Substances
   Management of Newly Purchased Chemical Substances    Flowchart Showing Procedures to be Followed before New Purchases of Raw Materials

In the Automobile Division, newly purchased
                                                                                                                                                                                            !1 Registered into
raw materials for oils and fats, paints,                               u Notification of decision                                    y Notification of decision                               PRTR❋4system
                                                                       whether or not to purchase                                    whether or not to purchase                             (Automobile Division)
cleansing materials, and other substances are
                                                         Purchasing and                                            New purchase                                     Environmental
assessed and tested by the environmental                  usage office                                             planning office                                management section
                                                                                                                                     e MSDS or breakdown of
management section or health and safety                            Purchase request                                                  environmental data such as
                                                                                                                                     the volume used
department section based on their chemical                                   q MSDS ❋3 request                                           r Deliberation                         t Report
                                                                                                                               w MSDS delivered                                  returned
composition and amount of use. A decision is              Purchasing                                                  Supplier or                                  Health and safety
                                                           division                                                  manufacturer                                 management section
then taken on whether or not to proceed with                              !0 Order placed
the purchase. In this way, we are tightening
                                                                                                      o Notification of purchase code (number) and volume of units required
our management of chemical substances.
                                                       ✽1 Autoclave: Thermophore and pressurizer used during production of combined materials for aircraft
                                                       ✽2 Air Dryer System: System for drying compressed air produced with a compressor                                                                        27
                                                       ✽3 MSDS: Material Safety Data Sheet
                                                       ✽4 PRTR: Pollutant Release and Transfer Register
                 Fiscal 2001 Program Achievements

 In fiscal 2001, 15 chemical substances subject to the PRTR Law were used by FHI, as detailed below.
 The total use of such chemical substances was up 6% from the previous year, but their release and transfer was down 7%. Major
reasons for this include a reduction in the emission of xylene and toluene into atmosphere through increasing in the volume of solvent
recycled by introducing an efficient purge solvent reprocessing system in the car painting process. We also reduced the emission of
lead compound through eliminating electrodeposition paint with lead

  Totals of PRTR Chemical Substances Used in Fiscal 2001
(Only amounts handled exceeding five tons a year are shown. Substances marked with ★ are designated Grade 1 Chemical Substances)                             Unit: Tons per year, g-TEQ/year (only dioxins)
                                                                  Amount     Amount emitted Amount emitted into Amount emitted             Amount         Amount      Amount eliminated   Amount      Amount treated
 Code     CAS number                       Name
                                                                  handled    into atmosphere public water supply into sewage systems      removed        consumed      by processing      recycled    at our landfills
      1          none    Soluble compound of zinc spelter           11.29                0             0.12                       0               2.16      9.01                  0             0            0
     16      141_43_5    2-aminoethanol                             31.77          0.001               2.57                       0               0.29           0          28.91               0            0
                         Polymer of 4,4'-isopropylidenediphenol
     30 25068 _ 38 _ 6                                              12.27                0                     0                  0               1.40     10.74              0.14              0            0
                         and 1-chloro-2,3-epoxypropane (liquid)
     40      100_41_4    Ethylbenzene                              124.81          46.63                       0                  0                 0      57.44                  0         20.74            0
     43      107_21_1    Ethylene glycol                           620.33                0                     0                  0                 0     620.33                  0             0            0
     63    1330_20_7     Xylene                                   1851.96        938.81                        0                  0               7.21    326.82                  0        579.12            0
    69★          none    Chromium (VI) compounds                     3.89                0                     0                0.03              1.58      0.32              1.93           0.02            0
   179★             _    Dioxins                                    0.025          0.025                       0                  0                 0            0                0             0            0
    224      108_67_8    1,3,5-trimethylbenzene                     46.11          18.10                       0                  0                 0      18.84                  0          9.17            0
    227      108_88_3    Toluene                                  1018.37        461.58                        0                  0               0.67    512.48              0.01          43.62            0
    272      117_81_7    Bis (2-ethylhexyl) phthalate               83.65                0                     0                  0               3.47     80.18                  0             0            0
   232★          none    Nickel compounds                            5.95                0                     0                  0               4.32      1.36                  0             0            0
   299★       71_43_2    Benzene                                    26.09                0             0.26                       0                 0      26.09                  0             0            0
    310       50_00_0    Formaldehyde                                6.91            6.91                      0                  0                 0            0                0             0            0
    311          none    Manganese and its compounds                 8.01                0                     0                  0               3.93      3.89                  0             0            0
                                  Total                           3851.41      1472.03                 3.15                     0.03          25.03      1667.50            30.99         652.68             0

      Reducing Substances with Environmental Impact                                                      Trends in VOC Emissions
   Reducing of VOCs Generated in the Painting
                                                                                                                         (g/m2)                                                                                   (%)
   Process (Automobile Division)                                                                                          120                                                                                     0
In fiscal 2001, we reduced emissions of VOCs per unit of                                                                                           _18                                      VOC emissions
                                                                                                                         100                               _24                              Rate of reduction     _20
area painted on the vehicle body to 52g/m , thereby achieving
                                                                                                         VOC emissions

                                                                                                                                                                                                                         Rate of reduction

our target of cutting such emissions to 53% of fiscal 1995                                                                 80
                                                                                                                                                                                            _47                   _40
levels. Throughout the plants of the Gunma Manufacturing                                                                                                                                             _53
Division and for all the colors used, we increased the                                                                                                                                                            _60
proportion of binder and pigment, the main components of
paint film, and reduced the proportion of volatile organic                                                                 20
compounds (VOC). Furthermore, we plan to develop water-                                                                     0
                                                                                                                                       1995       1996    1997       1998       1999        2000    2001
based paints, which have less environmental impact.
                                                                                                                                                                                                Fiscal year

    Management of PCBs                                                                                                          Dioxins
For polychlorinated biphenyls (PCBs), for which no                                                                        After we shut down the incinerator at the Gunma
appropriate breaking-down procedure has been established,                                                                 Manufacturing Division in December 2000, we shut down
we practice safe storage and management based on                                                                          those at the Utsunomiya Manufacturing Division and the
meticulous record keeping. We notified our storage status of                                                              Saitama Manufacturing Division in September 2001. This
PCB with the designated form in line with "Law Concerning                                                                 means we shut down all of our incinerators in every FHI
Special Measure against PCB waste" enforced in July 2001.                                                                 division, ending dioxin emissions from any sources.

                                                                                                                                         Fiscal 2001 Program Achievements

    Reducing Use of HFC134a                                                                                                SOx Emissions
HFC134a, currently used as a CFC-alternatives refrigerant in                                           Amount of SOx emitted in fiscal 2001 reduced 15% from the
air conditioners, is also believed to contribute to global                                             previous year through reducing fuel use for boilers and drying
warming. To reduce atmospheric emissions from the vehicle                                              furnaces and using fuel oil with low oxidized sulfur (SOx)
manufacturing line, we began using couplers with less                                                  levels.
leakage for hosepipes to inpour gas for air conditioners. As a
result, we were able to reduce atmospheric emissions to                                                             Trends in Amount of SOx Emitted
204kg, maintaining the already established pace of                                                 (Thousand Nm3)
improvement. This represents a 96% reduction from fiscal                                               250

1996 levels.

                                                                                                   Amount of SOx emitted
  Trends in Amount of HFC134a Emitted into the Atmosphere

      Volume emitted

                                               Base year fiscal 1996 = 100

                                                                                                                                 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01
                          40                                                                                                                                                                     Fiscal year

                                                                                                                           Prevention of Outpouring into Street Gutters
                                                                                                       At the Utsunomiya
                                                                                                       Manufacturing Division, we
                                 1996   1999         2000           2001                               finished building walls for
                                                                  Fiscal year
                                                                                                       scrubbers ✽1 outside the plants
                                                                                                       to prevent toxic substances
                                                                                                       from outpouring into street
                                                                                                       gutters in fiscal 2001.

      Green Procurement                                                                                                                                             Walls for scrubbers on the north
                                                                                                                                                                    of the surface finishing plant.

    Automobile Division
We held the second explanatory meeting on our green procurement activities to suppliers of parts and raw
materials in October 2001, and asked them to complete ISO 14001 certification procedures or set up
independently an environmental management systems equivalent of ISO 14001. Inquiries about substances
with environmental impact used in parts and raw materials purchased that were started in April 2000 are now
conducted with a simple inquiring system via FHI's unique information network, not on writing but on electronic
data. This new system made the inquiries more accurate and speedier.
 By the end of March 2002, 181 out of 289 suppliers had finished setting up environmental management
systems. Of the 181, 154 had acquired ISO 14001 certification. (In March 2001, 116 companies had
completed ISO 14001 certification procedures.)
                                                                                                                                                                                The second explanatory
                                                                                                                                                                                meeting on green
                                                                                                                                                                                procurement activities

    Industrial Products Division                                                                                           Green Purchasing
The Industrial Products Division also began green                                                      In October 2000, the Company compiled a list of environment-
procurement activities in April 2001, with around 110 suppliers                                        conscious office equipment. By fiscal 2001, every division can
brought into the program. It asked suppliers to put in place                                           purchase 65 items of environment-friendly products out of 133
environmental management systems by the end of fiscal                                                  standard articles that the Automobile Division began using at
2003, and report their use of certain substances designated                                            the end of March 2001.
by FHI. Thus, it is working on the reduction of substances with
environmental impact together with our suppliers.

✽1 Scrubbers: The system for elimination and neutralization of toxic mist included in emissions from surface finishing plants.                                                                            29
 ●Plant for Turning Paint Sludge into Raw Materials

 Paint Sludge Recycling Plant
 Since paint sludge produced during the surfacer and the top coat in the car painting process is adhesive, it is difficult to handle
 and dispose. We burned it up in our incinerator, created slag from its ash in a slag furnace outside and diverted it into road base
 materials in the past.
     We have aimed to recycle combustible waste and at last have succeeded in developing a system to convert paint sludge into
 damping sheets that prevent vibration and noise in car bodies and reducing agent in substitution for coke in steel mills. In this
 system, we collect a constant amount of paint sludge stably from the car painting process in the less-water and less adhesion
 form to make it easy to recycle, and send it to the paint sludge recycling plant to make it pulverulent. We had several tests since
 October 1999, and started using the paint sludge for damping sheets of vehicles such as Pleo and Legacy. The plant capacity is
 60 tons a month and we are aiming to deal with the whole amount of paint sludge the Company produces. Besides, we applied
 for a patent on this recycling system.

 Cyclone type recovering machine to                    Paint sludge recycling plant                     Damping sheet on the floor
 recover paint sludge efficiently

     System Flowchart of
     Paint Sludge Recycling Plant

                                                                  Evacuation of air

                             Conveyor                              Pre dryer
                                                                                                                       Screening machine

                                                            Evacuation of air

      Plant sludge thrown in
                                                            After dryer


                                             Dried sludge

             Grinding Process                          Drying Process                                 Screening Process
     Grind paint sludge to make it easy       Steam is used in the first and                   Screen dried sludge to meet the
     to throw in.                             second dryers to stir paint sludge               needs of recycling.
                                              and remove moisture and resolvent
                                              from the paint sludge.

Zero Emissions Target Reached
at the Utsunomiya Plant
Though the Utsunomiya Manufacturing Division and Transportation and Ecology
Systems Division have many kinds of waste produced during aircraft manufacturing
process that is difficult to deal with, they have worked to achieve zero emissions
through ensuring separating waste, reducing the total amount of waste, and finding an
optimum way to deal with the difficult waste. In January 1999, they announced that they
would achieve zero emissions by the end of fiscal 2001 and finally achieved the goal.
 To put it concretely, they ensured that they separate their waste into 64 items in three stages, their workplaces, the waste
collecting station and the recycling center. They also diverted fiber reinforced plastic (FRP) including advanced composite
materials (ACM) into steelmaking additives in a steel company, and wastewater sludge from surface finishing process into base
materials for cement. As a result of such efforts, the amount of waste disposed of at landfills remarkably decreased to 13 tons in
fiscal 2001, though it was 1,100 tons in fiscal 1997. Finally in the latter half of fiscal 2001, the two divisions achieved the goal of
zero emission level, less than 1 ton a month in the two.

 1. Plans for Zero Emissions Plants

Since the Utsunomiya Plant had unique problems, it has many kinds of waste difficult to deal with, that it has numerous kinds of
waste, and that it handles chemical substances classified as toxic, it clarified the tasks and measures to take for zero emissions

  Tasks                                 Measures
                                                                                                                                                       Enhancement of recycling
 1. Reduction of the total                                                                                         In the Utsunomiya Plant        Outside the Company            Finding the ways
                                                                                                                                                                                    to recycle and
    amount of waste                                                                                                                                                                      recyclers
                                                                                                       Valuable things (Things to sell)
 2. Improvement of recycling                                                                                                                                    Things recycled
    through strict waste                Resources    Production     Waste            Emission                                                    Things inverse
    separation.                                                                     separately                                                   onerous contract
                                                     Reduce, Reuse                     Strict waste                           Crushing
 3. Finding an optimum way
                                                     Reduction of the                  separation            Waste                                   Intermediate
    to deal with the difficult                       amount of toxic Reduction                                                 Volume                 treatment
                                                     waste                                                                    reduction                                       Landfill
    waste and improvements
    on recycling it.                                                                                                             Sorting
 4. Reduction of the amount
    of toxic waste.                                                                                                    Building of Recycling Center                     Zero emission level

                                                                       Fiscal 1998                       Fiscal 1999                         Fiscal 2000                   Fiscal 2001
 2. Several Steps to Zero Emissions Plants
                                                                     Primary Review                         Phase                             Phase                          Phase
We started working to achieve zero emissions                      ◆Planning of zero             ◆Activities for ISO                 ◆Technique development ◆Activities by
plants aiming to build a recycling-oriented society                 emissions activities          14001 certificate                   to recycle waste difficult        every employee
                                                                    Review the figures of             Set numerical targets           to deal with                      Execute the new
after FHI's president told employees at FHI                         fiscal 1997
                                                                                                      Manage with ISO 14001           Develop recycling
                                                                                                                                                                        separation rules
                                                                    Conduct an actual                                                 technique and find an             Development of each
                                                                                                      Measure the weight of
Environment Month in June 1998, to make the                         condition survey of waste
                                                                                                                                      optimum way to deal with
                                                                    Set the bench mark                                                                                  Shut down our
                                                                                                      Create workplace
biggest plants, the Gunma Manufacturing Division                    Make an execution plan            stations
                                                                                                                                      Trial of recycling and
                                                                                                                                      deciding a proper way of
                                                                                                                                                                        Dispose garbage by
                                                                    Create an action                  Eliminate personal trash        separation
and the Utsunomiya Manufacturing Division, zero                     organization                      cans
                                                                                                                                      Eliminate organic
                                                                                                                                                                        Recycle confidential
                                                                    Create the collecting                                             chlorine agent
emissions plants within three years.                                station

 3. Characteristics of Our Zero Emissions Activities
There are five characteristics of zero emissions activities conducted in the Utsunomiya Plant.

 Incorporate ISO                 Aim to reduce the                   Realise a                                     Build a recycling center                         Realise the recycling
 14001 concept into              total amount of                     manufacturing plant                           where we can separate                            of difficult waste to
 zero emissions                  waste.                              without an                                    and collect waste and                            deal with in
 activities.                                                         incinerator.                                  reduce the volume in                             cooperation with
                                                                                                                   the plants.                                      suppliers.

 Raise activity themes           ●
                                   Execute 3R                        Reduce the amount                               Execute strict waste                               Find an optimum
 and set the numerical             activities, especially            of burnable garbage                             separation and reduce                              way to deal with
 targets for building an                                             through strict                                  the cost for disposal.                             difficult waste.
                                   Reduce.                                                                         ●
                                                                                                                     Store things in the plants
 environment                     ●
                                   Reduce the amount                 separation of waste,                            and work by ourselves
 management system.                of waste and the                  aiming to shut down                             instead of asking other
                                   cost for disposal.                the incinerator.                                companies.

      2. Zero Emission Activities
 We set up an organization for zero emission activities and selected full-time staff. Three groups were created: one for reducing
 the total amount of waste, one for improving recycling through strict waste separation and one for disposing difficult waste to
 deal with and reducing the amount of toxic waste. Three people became the heads of each group.

 ●Flowchart of Separating and Recycling
 The most important point in separating is to assign a number to each kind separated, and to use the numbers at all the stages
 of workplaces, stations, and the recycling center.

                                      Workplaces                                                      Separating and collecting station                                                        Recycling center

                                                                                                                                                                                                   ●Volume eduction
                                                                                                                                                                                                     and crushing
                                                                                                                                                                                                      ●Collection and

     New classification guide to 64

 ●Measures to zero emissions
                  Activities                                      Measures                                                                     Case examples
                                             Reduction of the amount purchased                         Improving extraction rate of metal and plastic materials,Downsizing waste cloths
                                             Minimum quantity of packing materials Use of returnable boxes (Palletisation)
     1. Reduction of the total
                                             Minimum quantity of waste produced during production Reduction of the amount of wastewater sludge through changing neutralizing agent for wastewater
        amount of waste
                                             Life extension of finishing agent                         Alkali cleaning agent, soluble cutting fluid, water for painting booths
                                             Enhancement of reusing                                    Reusing of paper tubes, cartridges, and nonwoven cloths
                                             Waste separation at the first stage (workplaces) Provision of separated trash boxes, Employee education, Separation patrol
     2. Improving recycling through
                                             Upgrading of separation                                   Full equipment of zero emissions stations, Building the recycling center
        strict waste separation
                                             Increase in the number of items recycled                  Upgrading separation accuracy and developing the newest recycling technique for difficult waste to deal with
     3. Finding an optimum way to Finding an optimum way to deal with difficult waste Recycling wastewater sludge with heavy metal, paint, sealant
        deal with difficult waste and
        a way to recycle toxic waste Reducing the amount of toxic waste               Introduction of alternative technique and materials such as chlorinated organic compound

            Reduction of the total amount of waste                                                 Recycling of difficult waste to deal with
            through volume reduction and reusing                                              ■Combined                                                                                                       Alternative
                                                                                                materials                                                                                                     material of coke
        ■Sealant cartridges                                                                                                                                                                                   (Reduced gas)
        (In the past, we burned cartridges and solidified sealant                             (In the past, we
        together, and landfilled residual dross.)                                             did not have an
                                                                                              recycling method
                                                          Used sealant                        and generally sent
                                                          cartridges                          them to a landfill.)
                                                                                                                                                                          Note: The form recycled                Raw material for
                                                                                                                                  CFRP trim discard                       changes depending upon                 road base
                                                                                                                                                                          a processor.                           materials
                                                                                              ■Waste sealant
        Hardening in a drying room                                                            (In the past, we burned them and sent residual dross to a landfill.)(In the past, we did
                                                                                              not have an appropriate recycling method and generally sent them to a landfill.)
                                                                                                                                                                                                                      raw materials
                                                                                                                                                                                                                         of iron
                                                                                                                                                                   Crashed cans
           Nozzle               Cap            Cartridge         Solidified sealant

                                                                                                Waste sealant

                                                                                                                                                                    Squeezing the
                     Reusing after cleaning            Pellet materials for iron making                                 Can crashing machine                         content out                   Pellet materials for iron making

          Reduction of toxic waste
          We eliminated two organic agents, dichloromethane and trichloroethylene, by using alternative agents by July 2000.

                  5. Results of Zero Emissions Activities
      In the latter half of fiscal 2001, the Utsunomiya Plant                                                                                                           Mr. Hoshi, General
                                                                                                                                                                        Manager of the
      consisting of Aerospace Division and Transportation and                                                                                                           Utsunomiya
      Ecology Systems Division landfilled less than a ton a                                                                                                             Division is receiving
                                                                                                                                                                        a zero emissions
      month, which means it achieved the goal of zero emissions.                                                                                                        achievement
      The recycling rate was 92% exceeding the target, 90%.                                                                                                             certificate from Mr.
                                                                                                                                                                        Hanada, Vice
                                                                                                                                                                        President of FHI.
 ●Trends in the Results of Zero Emissions Activities in the Utsunomiya Plant.
                   (ton)        The total amount of waste      The amount of waste landfilled (%)
                  6,000                                                                        100
                                        4,988                                         92
                                                                                                                            Garbage is also decomposed instead of being burned.
                                                                                               70                                                                       Main Plant in the
Amount of waste


                                                                                                     Recycling rate
                  4,000                                                                                                                                                 Utsunomiya Plant
                                                65                  3,409                      60                                                                       introduced a
                                                              61                  3,186                                                                                 garbage disposer
                                   56                                                                                                                                   that completely
                  3,000                                                                        50                                                                       destroys garbage
                                                                                                                                                                        in February 2002.

                                                              520                              10
                      0                                                                     0
                           1997         1998          1999          2000          2001 Fiscal year
                           Note: The total amount of waste: The amount of every
                           secondary product produced during undertaking activities,
                           including the amount recycled.

                  6. Future Goals
                  We are aiming for higher level recycling of materials.
                  We are designing easy-to-dissolve jigs.
                  We are aiming to reduce recycling costs through reducing the amount of waste and strict separation.

                                                                                                Field Report
                                          Zero Emissions Achieved! Visible Zero Emissions Plant in Future
                                                                                                                      the rule. Some workplaces made hand-made separation boxes.
                                                                                                                      Offices stopped using individual trashcans to separate every
                                                                                                                      waste completely.
                                                                                                                        We took 45 measures only for reducing the total amount of
                                                                                                                      waste. One of them is to change the size of waste cloths to wipe
                                                                                                                      out stains from 35 centimeters square to 28 centimeters square
                                                                                                                      because we had used only center part of waste cloths. This
                                                                                                                      brought 10 tons a year of reduction. It also brought cost
                                                                                                                      reduction and became a good reason to alter our state of
                                                                                                                      consciousness. We shut down our incinerator in September
                  Zero Emissions Proceeding Group in Environment and Safety                                           2001, which generated a sense of crisis and every employee
                  Department in the Utsunomiya Manufacturing Division. From left,                                     cooperated to reduce 30% of garbage.
                  Mr. Sugahara, section-chief, Mr. Honma, Mr. Kawai, Mr. Sugatani                                       As for sealant used for waterproof of aircraft, we transferred it
                                                                                                                      into cartridges and disposed it with cartridges. We reused a pile
                  In April 1999, Zero Emissions Proceeding Group was organized                                        of sealant cartridges. We dry to harden the sealant cartridges
                  in Environment and Safety Department. Mr. Sugahara became a                                         and recycle the solidified sealant as pellet materials for iron
                  section-chief. Mr. Kawai, who had belonged to a design section,                                     making, and reuse the nozzles, caps and cartridges after
                  was in charge of a group for reducing the total amount of waste.                                    cleaning a couple of times. We use around 20,000 of such
                  Mr. Honma, who had belonged to a production technology                                              cartridges a year.
                  section, had charge of a group for improving recycling through                                        Recycling of FRP (combined materials) was very difficult.
                  strict waste separation. Mr. Sugatani, who had belonged to a                                        Especially FRP trim discard had various kinds of materials and
                  material research section, had charge of a group for disposing                                      sizes. We had landfilled them, but we managed to find a special
                  difficult waste to deal with and reducing the amount of toxic                                       recycler and discussed repeatedly in order to create waste with
                  waste to take advantage of each person's skill.                                                     quality to be accepted. Now FRP trim discard is recycled as
                    First of all, we worked on reducing the total amount of waste                                     steelmaking additives or road base materials.
                  and separating waste strictly to lessen emissions at the first                                        Now we are aiming to develop a visible zero emissions plant
                  stage. We sorted waste from the Utsunomiya Plant with an                                            with a focus on our recycling center. We are going to show how
                  aircraft plant into 64 items. If someone does not keep the rule for                                 we separate, collect, reduce the volume of and store waste and
                  separating waste, the separation itself is in vain. Since we had                                    introduce how our environment-related machines in the
                  discussed with recyclers many times to make the separation                                          recycling center work. We believe that this will make our zero
                  rule, we made a separation guide to make every employee keep                                        emissions activities improved.

                                                                            The Recycling Center
     In the recycling center newly built in the Utsunomiya Plant, waste from
 workplaces is collected, separated and the volume of which reduced and it is
 stored until the volume reaches to a certain level. The area is 640m2, and it
 contains not only the areas for operation and storage but also a showroom to
 maintain and improve our zero emissions activities and to promote
 environmental education, a crushing machine that is also a part produced by
 the Transportation and Ecology Systems Division and a compression baling
 machine and a volume reducing machine for foam polystyrene and contributes
 the recycling cost reduction through strict separation and volume reduction.                                                                                                          The Recycling Center

      Opening to the Public of the Recycling Center
 On April 4, 2002, we invited representatives from
 Utsunomiya City, community associations, and
 Tochigi Industrial Environment Management
 Association to a ceremony to put the recycling center
 on view with FHI's vice president, Mr. Hanada, who
 is also a director in charge of ecology systems.
                                                                                    At the Ceremony
                                                                                                                                                                                                        Explaining in
                                                                                                                                                                                                        the Exhibition
       The Purpose of the Recycling Center

             To make the recycling center the highlight of a visible zero emissions plant.                 To show the zero emissions plant in the Utsunomiya Plant.

             Cost reduction of waste disposal                                                              To have the function of selection, collection, volume reduction and storage.

             To adapt to the Waste Management Law                                                          To operate and store waste inside the recycling center

             To demonstrate environment-related products we developed                                      To exhibit our products and show how they work

               The Recycling Center

                                                                                                                            Compression                                           Volume Reducing
                                                                                                                            Baling                                                Machine for Foam
                   Exhibition Room                                                                                          Machine                                               Polystyrene

                                                                                                                       Discharge Storage Area                                     Carrying Out
                                                                                                      Storage Area

                                                                                                            Reduction Compression      Volume Reduction Machine                  Loader
                                                                                   Discharge                Area      Baling Machine   for Foam Polystyrene                     Container
                                                                                   Storage Area
                                                                                                                               Collection Area                             Storage Area
                                                                               Collection Area                                 Before Selection and     Selection
                                                                               Before Selection and                            Volume Reduction           Area
                                                                                                                                                                                              Carrying Out

                                                                               Volume Reduction                                                                                   Waste
                                                                                                                                                       Selection                  Plastic
          Panels and Documents for                                                                         Crushing                                    Work Station
                                                                                                           Machine                Second
          Explanation                                                                                                          Selection Area                                     Waste
                                                                                    Exhibition                                                                                    Plastic
                                                                                                           Electric                                                             Waste Paper
                                                                                                           Crushing                                                              Container

                                                                                                      Carrying In                                                 Carrying In

                                                                                                          Hydraulic Crushing
                                                                                                          Machine (75kw) for
                                                                                                          volume reduction of
                                                                                                          big refuses
          You can view materials here.
                                                                                                                             Electric Crushing Machine
                                                                                                                                       (35kw) for volume
                                                                                                                                     reduction of plastic

                                                                                                                                                    Fiscal 2001 Program Achievements

   4 Recycling
      Contribution toward a High-Efficiency, Low-Cost Recycling-Oriented Society
Having set clear recycling procedures, FHI is working to promote high-efficiency, low-cost recycling throughout society at every stage of its
production cycle from design through manufacturing and use to final disposal. In its planning and design activities, the Company is
constantly mindful of present and future issues of the disposal of the end-of-life vehicles as it goes about developing new vehicle models.

   Technological Development for the Coming Age of Recycling

                        We are continuing to develop technologies
                        to reduce the generation of wastes during
                        production and to recycle wastes.                                                                                                              We are developing technologies for the recycling
                                                                                                                                                                       of parts and raw materials recovered from
                                                                                                                                                                       vehicles built 10 years ago in current vehicle
     We aim to make our vehicle designs
     compatible with expected recycling
     practices 15 years into the future.
                                                                              In 15 y                  Disposal of                               Reu                               We are reducing the generation
                                                                                                                                                    se a                           of wastes during production and
                                                                                                    End-of-Life Vehicles
                                                                    ars                                                                                 nd
                                                             In 5 ye
                                                                                                                                                           Rec                     recycling wastes.
                                                                                                                                 Disposal of                  ycli
                                                                                                                              End-of-Life Vehicles
                           t                                    Reduc Production, Sales and Use
                    Presen               -or iented
                                                    design                                                                                                               Re
                                c ycling                                                                                                                                     ce
                        ting re
                   Promo            Development and Design                                                 Production, Sales and Use

                     Next-generation vehicles                                                                     Existing vehicles

   Treatment of End-of-Life Vehicles: Present and Future Issues

                   We are making next-generation vehicles currently in development compatible with recycling procedures.
                   We are also making contributions based on our speciality fields through joint recycling-technology

                               New vehicles, used vehicle showrooms                                    Batteries, tires,
                                                                             Pre-treatment             various fluids, fluorocarbons
                                                                                                                                                                 We aim to build vehicles that
                                                                                                                        Steel castings, aluminum,                can be more easily processed
                                                                                 Material recycling                     catalyzers, etc.                         within the existing
                              ELV ✽1
                                  Dismantling companies                                                               Body panels, bumpers,
                                                                                    Reuse of parts                    lights, etc.

                                                                                                   New material recycling

                           Body shell ✽2
                                                                                                                                                                 We are working to bring down
                                                                                                                                                                 costs and make better use of
                                    Shredding companies                             Metals recycling                    Steel, nonferrous items
                                                                                                                                                                 recycling materials.

                                                                                                     New ASR recycling
                               ASR ✽3
                               Final processing (landfills)                                 Existing infrastructure              New facilities and facilities due for expansion

✽1 ELV: End of Life Vehicle
✽2 Body shell: Remaining parts of body of an ELV after removal of 1) batteries, tires, various fluids, and other items that are pre-treated for recycling; 2) steel castings, aluminum,
   catalyzers, and other parts recyclable as materials; and 3) body panels, bumpers, and other reusable parts
✽3 ASR: Automobile Shredder Residue --that is, residue left after shredding of body shell, sorted by metal type for recycling

                  Fiscal 2001 Program Achievements

                                                                                                          Amounts of Lead to be Used in New Vehicles in Voluntary
     Design                                                                                  Reference:   JAMA ✽1 Guidelines

                                                                                                   By the end of 2000                Less than half of 1996 levels
      Prior Assessment of Recyclability of Automobiles under Development                           By the end of 2005              Less than one-third of 1996 levels
                                                                                                                                                      (Excluding batteries)
When we made full model changes to the Forester in fiscal 2001, we undertook a prior
assessment of the recyclability of every part of the new Forester. After evaluation of
available technologies at FHI and in the automobile industry, we adopted those most         ●Abandoning use of sodium azide
suitable for our purposes wherever possible. Progress is detailed below.                    Subaru has ceased using sodium azide, typically used as the
  At the same time, we are considering systematizing these assessments, including           gas propellant in air bags in its vehicles manufactured
increases in the size of organizations involved, to bolster our readiness for medium- and   domestically, since 1998. It did not use it in fiscal 2001.
long-term challenges and to strengthen activities to improve the recyclability of
automobiles under development. Having positioned ourselves to respond appropriately
to the Law of Promotion of Effective Use of Resources and the Vehicle-Recycling Law,        ●Reducing the amount of refrigerant in automobile air-
                                                                                             conditioning systems
we are striving to make a meaningful contribution toward creating a recycling-oriented
                                                                                            By the end of 1994, Subaru had completed the shift from the
                                                                                            restricted vehicle air-conditioning refrigerant CFC12 to the
                                                                                            CFC alternative HFC134a, which does not damage the ozone
      Reducing Substances with Environmental Impact                                         layer. However, HFC134a has now been implicated in global
                                                                                            warming, and we are studying ways of reducing the use of
We are committed to curtailing our use of substances with
                                                                                            this refrigerant and restraining the leakage of the refrigerant
environmental impact as soon as possible, not only to reduce
                                                                                            from development stage of new models.
the damage they cause to the global environment, but also to
remove the need for complicated recycling equipment and
operations for end-of-life vehicle treatment. We also believe it
                                                                                            ●Strengthening management of chemical substances
is important to reduce volumes of harmful substances from
parts and materials recycled.                                                               FHI has worked to reduce its use of chemical substances.
                                                                                            Those chemicals targeted for continued reduction are shown
●Reducing use of lead                                                                       in the table below. In addition, the range of such targeted
Unlike the previous Forester, the new model uses no lead in such                            chemicals will be expanded further.
parts as the fuel tank, fuel hose, electrodeposition paint, window
glass ceramics (black-tinted area), and wheel balancers. The
                                                                                             Substances Subject to Ongoing Reduction Efforts
amount of lead used in the new Forester was reduced remarkably to
less than one-seventh of the industry average in 1996.                                                                         Subject
                                                                                                   1                    Hydrochlorofluorocrabons✽2
                                                                                                   2                    Asbestos
  Reduction of Amount of Lead Used in the New Forester (Excluding Batteries)
                                                                                                   3                    Cadmium and its compounds
      (g)                                                                                          4                    Chromium (VI) compounds


                                                       Half of 1996 levels


    400                                              One-seventh of 1996 levels

                Industry average      Previous Forester       New Forester
                    in 1996

✽1 JAMA:Japan Automobile Manufacturers Association, Inc.
✽2 Hydrochlorofluorocarbons:CFC alternatives

                                                                                                                              Fiscal 2001 Program Achievements

       Increasing Use of Easily Recyclable Plastic Materials

When it comes to the final disposal of end-of-life vehicles, the first                                     ●Material substitutions in the new Forester
priority is ensuring that the parts are easy to remove. Then, it is                                        To improve recyclability, we have substituted certain
important that the separation of recovered parts does not take too                                         materials used in the previous Forester in the new models, as
long and that the recovered materials are easy to recycle.                                                 shown below.
                                                                                                              We developed a new acrylic resin sol material for
                                                                                                           undercoat that protects a vehicle from pebbles. This material
●Expanding use of PP and TPO                                                                               is used for fuel tanks of Legacy and Impreza as well as the
FHI is expanding its use of PP-series materials.                                                           new Forester, and we are expanding its use.
                                                                                                              By integrating the grades of PP materials, we are making
                                                                                                           separation unnecessary and recycling easier. The new
                                                                                                           Forester uses two kinds of integrated PP material, one for
  Change in Plastic Material Composition Rate
                                                                                                           bumpers and one for interior parts. Use of integrated PP
                                                                                                           material for bumpers is being extended to parts in newly
                                                                                                           developed vehicles.
 100                                                                   Other

  80                                                                   PVC
                                                                       (Polyvinyl Chloride)
                                                                       ABS resin
  60                                                                   Polyethylene


                                                                                                             Example of Substitution of Materials in the New Forester
           1974          1992         1998    2000       2001
                                                     (Fiscal Year)                               Door garnish                    Tonneau cover
        Note 1: PP includes TPO.                                                                 (PVC to TPO ✽1)                  (PVC to TPO leather)
        Note 2: PVC includes wire covering.

                                                                         Side door cover
                                                                         (PP to integrated PP material for bumpers)

                                                                                                                                                           Undercoat for fuel tank
                                                                                                                                                           (PVC to acrylic resin sol)

                                                                                              Bumper                                                     Fuel tank band cushion
                                                                                              (PP plastics to integrated PP                              (PVC to TPO)
                                                                                              material for bumpers)

✽1 TPO: Thermoplastic Olefin: A flexible material based on PP and polyethylene and used for the surface of instrument panel pads, among other things

                  Fiscal 2001 Program Achievements

The integrated PP material is used for around 85% of subject interior
parts (measured by weight) in the new Forester model. Use of integrated
PP materials is being extended to all PP plastic interior parts.
  Please see page 39 for more details on integrated PP materials used
in interior parts.

  Examples of Use of Integrated PP Materials Used in Interior Parts in the New Forester                                         Materials for Soft Pad Parts

                                                                                                                                                   Integrated interior material

                                                                                                                                                        PP foam cushioning material

                                                                                                                                                                 TPO surface material

    Soft Pad Parts (Colored Yellow-green)                                        Parts with Integrated Interior Materials (Colored Green)
      These parts consist of the integrated interior material in base              Integrated interior materials are used for around 70 kinds
      layer, the PP foam cushioning material and the TPO surface                   of parts such as instrument panel and its parts, door trim,
      material. These are made with olefin resin easier to recycle.                console box, and pillar trim.

     Making Vehicles Easier to Dismantle

By shortening the time taken to remove parts from vehicles, it
becomes more economical and efficient to recycle them as
                                                                                                            We have integrated two parts, and reduced the number of bolted
base materials or reuse them.                                                                               joints and other components
   In the new Forester, we have made it easier to dismantle                                                Previous Forester
headlights (please see figures on the right) and other parts as
detailed below.

  Examples of Parts We Have Made Easier to Dismantle

           Part                            Contents of Improvement
 Mud guard                    •Ceasing riveted joint
  (Wheel house)               •Reducing the number of fastening points by 37%
                                                                                                           New Forester
 Roof rail                    •Reducing the number of fastening points by 28%
 Engine under cover           •Reducing the number of fastening points by 30%
 Front-hood insulator         •Reducing the number of fastening points by 8%
 Rear bumper                  •Reducing the number of fastening points by 32%
 Rear lamp                    •Reducing the number of fastening points by 33%
                              •Ceasing to use adhesives and sealing materials
 Wiper (Module)               •Reducing the number of fastening points by 50%
 Heater cooling unit          •Reducing the number of fastening points by 35%
 Seat                         •Separating pads from metal flames to
 (Urethane foam pad)          make them easier to remove
 Fuel tank                    •Adding drain cocks at two points in the base of the tank

                                                                                                                      Fiscal 2001 Program Achievements

     Using Recycled Waste from Other Industries

FHI is also aggressively using products recycled from the waste of industries other than the automobile industry, and developing
technologies to recycle waste materials in our production plants to use them for new vehicles. The graphic below shows examples of
such products used in the new Forester.

                 Examples of Use in the New Forester of Recycled Products

                                                              Plastic bottle recycling materials       Scraps from clothing manufacturers
                                                              (Toe board insulator)                    (Base layer of trim)

                                                                                                                       Paint sludge ✽1, used paper
                                                                                                                       (Vibration-absorbing material for floor panels)

                                               Waste of painted bumpers                            Plastic bottle recycling materials
                                               (Bumpers)                                           (Floor carpet insulator)

      Procurement and Production

     System for Grade Integration of PP Plastic for Interior Parts

Previously, a great deal of waste was caused in our material manufacturing, compounding, and parts mould-processing procedures,
due to the fact that we were dealing with different grades of PP materials in each part, and different mixes of strengthening additive
(talc) and coloring pigments depending upon parts, etc.
   In order to keep such waste to a minimum, we use existing mass-production grades in our selection of integration materials instead
of new grades. We use one type for talc and one type for each shade of the coloring pigments. This is converted into master-batch*2,
which is mixed in with the PP during injection moulding.

                    Grade Integration of PP Plastic for Interior Materials

                                      Materials manufacturer                                                             Parts manufacturer
                            PP (pellet)              Color master-batch (pellet)
                                                                                                                       Talc master-batch (pellet)
                   (integrated                                     Color X=one type                PP (pellet)
                   material)                                                                                                            Color master-batch
                  Talc master-batch                                Color Y=one type
                  t-grade                                          Color Z=one type                                                                                      All parts
                                                                                                                                                                         made of
                                 PP and talc each of one type,
                                 one type per color for pigments

✽1 Paint sludge: Waste paint that did not adhere to vehicle bodies in the car painting process.
✽2 Master-batch is compound of coloring pigment or talc within resin at high concentrations, and can blend PP materials uniformly in the injection-moulding machine.

              Fiscal 2001 Program Achievements

     Recycling Waste Materials from Production Process

FHI is developing technologies for recycling waste materials                   Theory for Bumper Paint-Film Peeling Using the Roller Press Method
from production process more efficiently. For example, we
have found a way of recycling paint sludge given off by the
paint shop. (Please see page 30 for more details.)
  As for painted bumpers, FHI has created the Roller Press
Method, a proprietary technology for removing paint films,
and we reuse them for materials of mass-produced bumpers.
The pilot program began in February 1996, and in January
2000 FHI began using recycled material from painted
bumpers for the Pleo minicar's mass-produced bumpers. Use
in the Forester followed in October 2000.

     Group-wide Effort to Increase Recycling

FHI is working to promote recycling not only in its own factories, but is also involved in joint efforts with suppliers to recycle waste
generated by their factories. For example, after seat covering material and TPO plastic surfacing for instrument panels and door trim
are cut, this waste is blended with new PP plastic materials, yielding a new technology for reusing upholstery plastic parts.

 Subaru Group's Reuse of Waste after Cutting Materials

                                                                       Seat side cover

        Waste after seat cover materials cut

                                                                  Glove compartment (inner)

     Waste after surface materials of instrument
              panels and door trim cut

                                                                                                   Fiscal 2001 Program Achievements

      Sales and Service

     Warning Flare Collection

As for warning flares that are supposed to be replaced periodically, the automobile industry set
up the channels to deal with those discharged. FHI made a collection box for warning flares to
send collected ones to manufacturer in cooperation with dealerships. The Company began
collecting warning flares in October 2001 and around 15,600 warning flares were collected and
dealt with properly by processors by the end of March 2002.
                                                                                                                                                       Warning Flare
                                                                                                                                                       Collectin Box

     Air Bag Collection from End-of-Life Vehicles and its Disposal

Although air bags are effective in terms of safety, they have been said to pose a risk of emitting hazardous substances such as sodium
azide used previously in the crushing process and when inflator case is dissolved in its reusing process if they are processed unused
with an end-of-life vehicles. In 1999, procedures for safely collecting and disposing of the air bags were laid down primarily by JAMA.
FHI is developing ways to deal with air bags without removing them from end-of-life vehicles, as more and more vehicles with an air
bag are produced and we have to take economical efficiency into consideration.

     Collecting and Destroying CFC12 and HFC134a

As for refrigerant for vehicle air conditioners, CFC12 was completely replaced by the new
nonozone-depleting refrigerant HFC134a by 1994, but HFC134a is said to have impact on
global warming. In order to prevent these harmful chemicals from emitting into the atmosphere,
JAMA set up CFC's collecting and destroying system in 1998 and one for HFC134a in 2001.
   FHI also utilised these systems and finished expanding the systems for CFC12 to all over
Japan in 1998, and it made efforts to make dealerships use a collecting machine that can collect
both CFC12 and HFC134a to destroy HFC134a properly, in fiscal 2001. The Company became
a member of JAMA's "Freon team" organized in March 2002 to deal with the Law of Collecting
and Destroying Freon enforced in June 2001 and is making efforts to set up a system for
collecting and destroying these chemicals appropriately.                                                                               CFC12 and HFC134a
                                                                                                                                       Collecting Machine


     Scrapped Bumper Collection System

FHI established an in-house system to identify          Parts Produced from Scrapped Bumpers       Progress made in Scrapped Bumper Collection
the materials used in plastic parts in 1973, ahead
                                                        Model         Part                       (1,000 bumpers)
of the timetable for voluntary industry guidelines
                                                        Legacy        Engine undercover          40
for the establishment of such systems. This                           Fuel tank protector
system was very helpful when FHI began the                            Rear-quarter trim
collection of scrapped bumpers in 1993 in Tokyo                       Rear-quarter trim pocket   30
                                                        Impreza       Air Ventilator
and Kanagawa Prefecture, and was expanded to                                                     25
                                                                      Trunk trim
cover all of Japan by March 2000. In fiscal 2001,                     Turn indicator cover       20
37,100 scrapped bumpers were collected, an              Pleo          Undercover
increase of 8% over fiscal 2000.                                      Sub-trunk box              15
                                                        Sambar        Undercover
  The scrapped bumpers were recycled for use                                                     10
                                                                      Splashboard rear bulk
in other parts as shown in the chart to the right. In                 Engine cover                5
addition, FHI is developing effective new                             Air guide
technologies for recycling collected bumpers for                      Battery cover                   ’92   ’93    ’94   ’95   ’96   ’97   ’98   ’99     ’00   ’01
                                                                      Front undercover                                                                     Fiscal year
reuse in the bumpers of new automobiles.

             Fiscal 2001 Program Achievements

     Disposal of End-of-Life Vehicles

    Cooperation with dismantling and shredding companies

FHI is working with companies that process end-of-life vehicles to conduct R&D for the improvement of recycling processes. The
results of joint development are made public in order to contribute to the realization of recycling-oriented society. Of course, these
automobile manufacturing processes are reflected in the next-generation automobiles currently in the development stages.
   Most of the automobile shredder residue from scrapped automobiles is landfilled, but FHI believes that it contributes greatly waste
reduction to remove and recycle auto window glass, which currently accounts for approximately 20% of the shredder residue. The
Company is working with eight dismantling companies in Kanto Area to promote the efficiency of collection and logistics and improve
the quality of recycled materials by removing foreign materials for economical recycle of auto window glass.

   In fiscal 2001, the Company collected around 24 tons of
side door glass and performed experiments to remove                                  Dismantling Companies FHI is Working with for Efficient Recycle
foreign materials. In addition, it collected around 70 tons of
                                                                                      Company name                                Location
laminated glass of front window and performed experiments
                                                                                      Car Steal Co., Ltd.                         Maebashi City, Gunma
to separate glass with plastic center film.
                                                                                      Nagao Automobile Recycling Center Co-op     Tobu-machi, Nagano
   We are working with glass product manufacturers to
                                                                                      Ibajihan Recycling Center Co., Ltd.         Minori-machi, Ibaraki
conduct R&D for recycling the glass collected.
                                                                                      Metal Recycling Co., Ltd.                   Kawashima Town, Saitama
                                                                                      Showa Metal Co., Ltd.                       Koshigaya City, Saitama
                                                                                      Renaissance Co., Ltd.                       Kimitsu City, Chiba
                                                                                      Keiaisha Co., Ltd.                          Yokohama City, Kanagawa
                                                                                      Tsuruoka Co., Ltd.                          Oyama City, Tochigi

Foreign materials are removed from glass in
combination with a magnetic separating
machine and visual separation.

    More Efficient and Lower-cost Disposal of End-of-Life Vehicles

FHI is developing effective technologies          Flowchart of Separation Test of Shredder Dust from End-of-Life Vehicles
by determining what is necessary in the
future through discussions with recyclers,
such as dismantling and iron scrapping
   One of them is developing recycling
machines. FHI performed experiments to
separate shredder dust with our pilot
machine in Tsukuba City in Ibaraki
Prefecture and succeeded in removing
heavy metal such as copper at a lower
cost. We believe that we can contribute
greatly to this field by putting this into
practical use in the future.

                                                                                                      Fiscal 2001 Program Achievements

  5 Logistics
FHI is working to improve transportation efficiency, reduce packaging materials, promote recycling, and reduce environmental impact
in all areas of logistics, including the transportation of completed automobiles, service parts, and knockdown parts.

    Reducing the Environmental Impact of the Transportation of Completed Automobiles (Subaru Physical Distribution Company)
                                                                                    Transport Modal Shifts
Subaru Physical Distribution Company is promoting activities                                                                                   (1,000 vehicles)
for energy-saving and improvement of logistic quality in                                                     Fiscal 1995 Fiscal 1999 Fiscal 2000 Fiscal 2001
                                                                                   Number of completed
collaboration with Subaru transportation companies. It is                          automobiles transported      411         468         471           464
                                                                                   Number of automobiles
working from various angles such as setting up the most                            transported jointly           3           10          10           10
appropriate transportation route, saving fuel consumption like                     Number of automobiles
                                                                                   transported by water         126         130         131           125
energy-saving driving, stopping ticking over, and automobile                       Number of automobiles
                                                                                                                 0           1            1            1
                                                                                   transported by rail
maintenance, attending classes for energy-saving driving. In
addition, it conducts a survey about the number of low
emission vehicles and how they are performing energy-saving driving to enlighten those companies about environmental conservation
as well as to comprehend the actual situation.
  The company is changing the modes of transport, including shifting from land to sea transport for deliveries over long distances. It is
also transporting jointly in order to efficiently use vehicles after deliveries.

    Reducing the Environmental Impact of the Transportation of Service Parts (Subaru Parts Center)
Subaru Parts Center in Ohta City, Gunma Prefecture,
provides dealerships all over Japan with service parts. It is
working on activities for reducing the environmental impact
as follows.

   Simple Packaging

It has already shipped mufflers without packaging. In
addition, it promoted simple packaging of other parts
including shifting from cardboard packaging to plastic
packaging for splash guards and shifting from cardboard                            Splash guards are shipped               Bumper beams are shipped
                                                                                   wrapped by plastic.                     without packaging to save
packaging to without packaging for bumper beams.                                                                           cardboard by 6,000m2 per year.

   Packaging Simple to Remove

When it shipped front-hood, it used a cardboard box with
foam polystyrene bonded as cushioning materials, but it
started to use downsized cushioning materials made of only
doubled cardboard to make it unnecessary to separate at

   Usage of Vehicles Coming Back
                                                                                   Front-hood is packaged with cushion            Cardboard cushion
It started using parts manufacturer's vehicles after delivering                    materials made of only cardboard.              materials
production parts to the Gunma Manufacturing Division in
Ohta City to deliver service parts to dealerships in order to
improve transport efficiency on a trial basis.


As a corporate member of society, FHI is committed to promoting exchange with local communities and society as a whole. To
understand each other and thrive in harmony with host communities, FHI vigorously participates in all kinds of exchange forums,
cleanup activities, tree planting, environment-related events, and fund-raising activities.

  1 Social Contributions
     Cleanup Activities                                                                           Exchange with the Region
Every production base is committed to unique cleanup                                       For elementary school students, FHI held "Summer Vacation
activities. For example, the Subaru Community Exchange                                     Vehicle Class" in Gunma Manufacturing Divisions where
Association that the Gunma Manufacturing Division leads                                    children can see the automobile assembly plant. This event
takes part in a cleanup activity in Kanayama every year,                                   started in 1975 as a kind of social study, and it was the 26th
which is a symbol of Ohta City. In fiscal 2001, 400 people                                 in fiscal 2001.
took part in the activity in May, and 260 people in                                            Some 20,000 people who are neighbors and employees'
September.                                                                                 families attended the Gunma Manufacturing Division's
                                                                                           Subaru Thank-You Festival, and some 11,000 people
    Production Base                             Cleanup Activity                           attended the Utsunomiya Manufacturing Division's
                                Cleanup of Kanayama (May, September), Cleanup of
 Gunma Manufacturing Division
                                area around factories
                                                                                           Friendship Festival in October. In addition, FHI invited 650
 Utsunomiya Manufacturing                                                                  children in the neighborhood and people living in welfare
                                "Clean Campaign" in cooperation with Utsunomiya City
 Division, Transportation and
 Ecology Systems Division
                                employees (June, full cleanup of areas around factories)   facilities to the 18th Subaru Friendship Concert staged in
 Saitama Manufacturing
                                Cleanup along roads around the factory (October)
                                                                                           June by Oizumi Town and the Subaru Community Exchange
                                                                                           Association, and held a Japanese drum concert.
 Bus Manufacturing and House    Cleanup of roads and waterways around the factory
 Prefabricating Division        (June)
                                                                                               The Utsunomiya Manufacturing Division invited
                                                                                           representatives from residents' associations in the
                                                                                           neighborhood to the factory tour also in fiscal 2001.

Cleaning up of Kanayama (Gunma
Manufacturing Division)
                                                                                           Vehicle Class (Gunma                                  The 18th Subaru Friendship
                                                                                           Manufacturing Division)                               Concert

     Donations and Other Voluntary Activities
Having achieved its target for donations to its Green Fund,
the Utsunomiya Manufacturing Division gave the
contributions to the Tochigi Prefecture Green Promotion
Committee in October 2001. For this donation, it received a
letter of appreciation from National Land Afforestation
Promotion Organization in February 2002.
  In addition, it supported International Volunteer Year's
                                                                                           Green Fund (Utsunomiya Manufacturing Division)           Letter of Appreciation for
memorial events called "Love Green Actions 2001" , which                                   Mr. Miyake, Administrative Manager, is giving money      Green Fund
held events including "the 10,000 People Meeting for                                       collected.

Thinking about Children's Future and Environment", by
OISCA International, an international private organization
established to protect the earth's future by people who have
different languages, culture, religions, traditions, customs
and climates, and committees of United Nations, and it
received a letter of appreciation.                                                                                         Letter (Plaque) of Appreciation
                                                                                                                           for "Love Green Actions 2001"

                                                                                                                                Social Action Programs

2 Cooperation in Special Events
               Function Name                                        Sponsors                                         Venue                                   Date
  Eco-Car World 2001 (Low Pollution
                                                             Environment Ministry                             Yoyogi Park, Tokyo                        June 2-3, 2001
  Vehicle Fair)

  8th All Japan Wind Summit                           Wind Summit Promotion Committee                       Hatori Lake, Fukushima                      Sept. 5-7, 2001
  Nagoya Low Pollution Vehicle Fair 2001                    Nagoya City and others                     Shonai Green Lung Park, Nagoya                  Sept. 29-30, 2001
  3rd Gunma Environment Festival                               Gunma Prefecture                      Gunma Prefectural Government Buildings             Sept. 30, 2001
  Utsunomiya City Environment Fair                              Utsunomiya City                              Mobara Recycle Plaza                        Oct. 13, 2001
  Tottori Industrial Technology Fair 2001 Tottori Prefecture, Industrial Development Organization           Tottori Prefectural Gym                     Nov. 2-4, 2001
  OSAKA Low Pollution Vehicle Fair                              Osaka Prefecture                              Expo Memorial Park                       Nov. 10-11, 2001
  Ohta City Environment Fair                                         Ohta City                         Ohta City Governmental Buildings                 Nov. 11, 2001

                                                    Energy Conservation Center Japan,
  ENEX 2002                                                                                                      INTEX OSAKA                           Feb. 14-16, 2002

                                                                                                         3rd Gunma
 Eco-Car World 2001                                                                                      Environment

                                          Sambar CNG Exhibited

3 Lectures and Other Activities
                       Lecture Meeting (Month, Department)                                                                   Contents of the Lecture

  2nd Industrial Security Workshop by Tochigi Environmental
                                                                                                    Introduction of zero emissions activities in the Utsunomiya Plant,
  Management Association (November 2001, Administration
                                                                                                    "Working on Industrial Waste Zero Emissions"
  Department in Utsunomiya Manufacturing Division)

  "No Paint Sludge! Challenge to Zero Emissions" by Japan Paint Society                             Showing the case of recycling paint sludge as filling materials for
  (March 2002, Second Production Technology Department in Gunma                                     vehicles' damping materials and lectures about the technology
  Manufacturing Division)                                                                           and problems.

  Workshops at night by lecturers from workplaces (December 2001,                                   Lectures about FHI's environmental protection activities and recycling
  Environmental Affairs Promotion Office)                                                           of vehicles.

  Explanations to junior high school students who visited FHI's head                                Explanations about FHI's activities to protect environment as an
  office as social study (April 2001, Environmental Affairs Promotion Office)                       automobile manufacturing company.


FHI holds an Environmental Problems Meeting periodically with seven
affiliated companies adopting consolidated accounting, which have a lot of
environmental impact in their manufacturing or transporting businesses, to
guide and support them to develop each company's environmental
management system and reduce their environmental impact, and to report
about each company's EMS activity. This meeting was first held in July
1999, and held four times in fiscal 2001.
 Each company introduced environmental accounting based on FHI's
guideline in fiscal 2001.                                                                                         Environmental Problems Meeting

     Company Names                                             Description of Business
                                                                                                                                   Sales Volume Breakdown
                              Manufacture and sales of parts for car trailers, crane trucks, construction materials,
 Yusoki Kogyo K.K.
                              and automobiles
 Fuji Robin Industries        Manufacture, service, and sales of agricultural/forestry equipment, engines, fire
 Ltd.                         pumps, and related parts
                              Manufacture and sales of automobile parts, industrial machinery, and agricultural                   Total sales of
 Fuji Machinery Co., Ltd.                                                                                                         the seven
 Ichitan Co., Ltd.            Precision forged and machined products for automobiles and industrial machinery                     companies
                                                                                                                                  6.0%             Sales of FHI 94.0%
                              Manufacture of Subaru specially equipped automobiles and management of Subaru
 Kiryu Industrial Co., Ltd.
                              automobile parts distribution
 Subaru Physical
                              Shipping and land freight for automobiles and their components
 Distribution Company
 Subaru K.D. Logistic                                                                                                             Total sales of FHI group: 980.6 billion
                              Packaging and delivery for automobile parts, production machines, jigs, etc.
 Co., Ltd.

     Support to Affiliated Companies                                                               An Example of Activities by Affiliated Companies (Fuji Machinery Co., Ltd.)

FHI supports each affiliated company's development of                                         Fuji Machinery is working on improving efficiency of energy
environmental management systems in various ways. In                                          use through setting up an electric power meter in every
addition to holding the Environmental Problems Meeting                                        processing division to keep track of and manage the amount
regularly, it delivers lectures in the affiliated companies and                               of energy used in each division.
has their employees take part in its education programs for                                      As for waste, though the Company dealt with metal
internal environmental auditors. In fiscal 2001, it also                                      shavings in a lump previously, it now separates into two
provided an explanation on introducing environmental                                          kinds, shavings processed with oil-based cutting oil and ones
accounting in each company.                                                                   processed with water-based cutting oil, to manage it. It also
                                                                                              separates cutting oil waste into two kinds in the same way
                                                                                              and recycles oil-based one free of cost, which caused
                                                                                              recycling cost reduction.
                                                                                                 It started working to acquire ISO14001 certificate in March
                                                                                              2001, and got main investigation at the beginning of April

Members of EMS Promoting Group in Gunma
Manufacturing Division and Environmental Affairs
Promotion Office Are Providing an Explanation in Ichitan
Co., Ltd.

                                                                                             Metal Shavings Collecting Station (Separating iron and
                                                                                             aluminum shavings into ones processed with oil-based
                                                                                             cutting oil and ones processed with water-based one)

                                                                                                                                        Environmental Activities by Affiliated Company

      Actual Achievement of Seven Affiliated Companies

    Environmental Accounting and Environmental Performances

The following chart shows the seven affiliated companies' results of aggregation of environmental costs and effects in fiscal 2001 (April 2001 to March
2002) calculated based on FHI's environmental accounting guideline. Please see pages 10-11 about FHI's environmental accounting.

                                 Environmental cost                                                                   Economic effect                                               Environmental performances
                            Cost category                                  Amount of cost                                                                 Amount of                                                       Fiscal
                                                                                                                      Details                               cost                   Items                   Unit
 (Boxed text is a cost category in “Ministry of Environment Guidelines”)     ( million)                                                                   ( million)                                                      2001
                         Operating cost of the incinerator,                                 Reduction of recycling cost by restraining                                   The amount of waste                ton           1,400
                         Recycling and processing of waste                                  the production of waste disposal and                                         disposal generated
    Costs for            materials                                                 130      changing the methods for waste disposal                               68     The amount of waste                ton           1,349
    reducing             Reduction of waste materials                                       Profit on sale of valuable resources                                         disposal carried out
  environmental                  Resources cycling cost                                     generated by recycling                                                       The amount of landfills            ton              516
     impact              Energy conservation                                                                                                                             Volume of energy consumed     kl/ 100 millions     39.1
   (Production           CO2 emission reductions                                     37     Reduction of energy cost                                              18     per value of production
      stage)                  Cost for protecting global environment                                                                                                     Amount of CO2 emissions       thousand ton-C        8.3
                         Wastewater treatment, Emitted gas                                                                                                               The amount of PRTR chemical
  Business area                                                                                                                                                          substances dealt with              ton             116
                         treatment, Environment pollution                                   Cost reduction by alternating cleaning
      costs              prevention
                                                                                     75     agent (chemical substances)
                                                                                                                                                                   0     The amount of PRTR chemical
                                                                                                                                                                                                            ton              99
                                                                                                                                                                         substances emitted and
                             Environment pollution prevention cost                                                                                                       removed

                          Total cost for environmental impact reduction            242      Total of effects by environmental impact reduction                    86
                         Education, ISO 14001 related issues,                                                                                                              Note 1: Only amounts handled exceeding five
                         investigation                                             150                                                                                             tons a year calculated (exceeding 0.5
                                     Management cost                                                                                                                               tons a year for substances designated
                                                                                            Impossible to get information                                     -
 Investment costs        Research and development
                                                                                                                                                                                   Grade 1 Chemical Substances)
                            Research and development cost
                         Total investment cost                                     222      Total investment effect (Impossible to get information)           0
                         Cost increment for material changes
                         Costs for disposal of end-of-life
                         products, social contribution,
                         environmental protection, and others                               Cost reduction through material changes
    Other costs              Upstream and downstream cost                            32     Material purchasing cost reduction through                        0
                                    Social activity cost                                    using recycled materials
                              Environmental protection cost
                                      Cost for others

 Total cost                                                                        496                                                                            86

  Environmental Cost                                                        Amount of waste disposal generated                                               Amount of CO2 emitted

     Total costs of                                                                Total amount of                                FHI's
     the seven affiliated                                                          the seven affiliated                           amount                               Total emission of
     companies 1.9%                                                                companies 66.8%                                33.2%                                the seven affiliated
                                                                                                                                                                       companies 10.7%
                                                                                                                                                                                                       FHI's emission
                                  FHI's cost 98.1%                                                                                                                                                     89.3%

 Total costs of FHI group: 25,873 million                                  Total amount of FHI group: 2,097 tons                                            Total amount of FHI group: 78.2 thousand ton-C


The following chart shows figures about PRTR handled by the seven affiliated companies. Please see page 28 about FHI.

                                                                                   Unit: Thousand tons per year
                                                                                                                                       Amount of PRTR Chemical Substances Emitted and Removed
                                                                           Amount           Amount           Amount
  Code         CAS Number                          Name
                                                                           handled          emitted         removed
      63 1330-20-7                   Xylene                                     39.60           30.35               0.62                          The total amount of
     69★ none                        Chromium (VI) compounds                      3.33                0                 0                         the seven affiliated
                                                                                                                                                  companies 6.2%
     145 75-09-2                     Dichloromethane                            13.59           10.08               3.51
     211 79-01-6                     Trichloroethylene                          22.97           15.65               7.32                                                           FHI's amount
     227 108-88-3                    Toluene                                    36.96           29.94               1.03
                                 Total                                        116.45            86.02             12.48
                                                                                                                                     Total amount of FHI group: 1,599 tons
Note 2: Substance marked with ★ are designated Grade 1 Chemical Substances
Note 3: Trichloroethylene was ceased using in July 2001

FHI possesses overseas production bases in the United States (automobiles, general-purpose engines), Taiwan (automobiles), and
China (automobiles, general-purpose engines). At each of these plants, multiple types of environmental conservation activities are
carried out. The Subaru sales agencies are also active in contributing to local communities.

     Environment Impact Reduction Activities                                  Social Contribution Activities

                                                                          As for the relationship with the neighbouring community, the
     Subaru-Isuzu Automotive, Inc. (SIA)
                                                                          U.S. sole importer Subaru of America, Inc. (SOA) has a
SIA, the Subaru production base in the U.S., developed the                philosophy that it should invest in activities that bring an
environmental management system and is working on waste                   improvement of the quality of life in the community where
disposal reduction, recycling and energy-saving activities. For           Subaru employees live their lives and work. Based on this
example, it succeeded in recycled use of pre-processing                   philosophy, the Company is working on its social contribution
water and zero emissions of sludge. In addition, the amount               activities, whose three categories are a support as a
of waste disposal decreased to around one-tenth of the past               company especially to education, volunteer activities, and
through cleaning up sediments in paint pipes. It is also                  SOA Financial Group, which is regardful of programs on
proactively working on recycling of paint sludge.                         education, arts, health and society and has donated around
                                                                          four million dollars since it was established in 1984.

     Guizhou Yunque Automobile
                                                                              Providing Dismantling Information on End-of-Life Vehicles
Guizhou Yunque Automobile is the mini-sized vehicle
production base in China. As a result of an overall                       As its response to European Union (EU) recycling laws, FHI
environmental investigation of 197 manufacturers in Anshun                provides dismantling information to enable the more efficient
City conveyed by Political Association Committee in Anshun                dismantling of collected end-of-life vehicles. In 1999, twenty
City in Guizhou, this Company was given an award as an                    European, Japanese, and Korean automotive manufacturers
environmental conservation advanced company and was                       got together and kicked off the International Dismantling
presented a plaque and a certificate in July 2001. This                   Information System (IDIS), a joint effort to provide the
investigation included visiting factories and interviews about            necessary information. Subaru is, of course, a participant.
what kind of activities they do to maintain and improve the                 The newest edition is Version 4, published in April 2001 in
environment, whether or not they keep the national standard               CD-ROM format. It contains arrangement diagrams of the
of factory disposal, how they reduce the amount of energy                 principal parts materials and layout of the principal parts, pre-
like electricity and fossil fuel, and how they acquire and                treatment topics (oil drainage and the like), designated parts
manage green space around factories.                                      dismantling subjects, and others.
  The Company is also working on recycling hydraulic fluid
and others through purifying them and giving employees in
the production stage education on necessity of environmental
conservation and improvement.

                                                                          Example of dismantling information

Received an award as an environmental
conservation advanced company.
(Mr. Aiba: Center of the second line)

                                                                                                          PLANT SITE DATA
                                                                                                                                 [Data measurement] April 2001-March 2002

Gunma Manufacturing Division
   Main Plant
[Location] 1-1, Subaru-cho, Ohta, Gunma
[Site area (building area)] 590,000m2(260,000m2)                                             ●Air Pollution Data
                                                                                              Regulation; Air Pollution Control Law
[Products manufactured] Pleo, Sambar models
                                                                                                Substance             Facilities      Regulated valves    Maximum        Average
[Number of employees] 2,378
●Water Pollution Data                                                                                                                     150              125           112.3
  Discharge; Public rivers Regulation; Pollution Control Law, Gunma Prefectural Ordinances                                                180               96             81
      Substance          Regulated values      Maximum          Minimum           Average                                                 230              112            84.8
          pH                 5.8-8.6             7.9                7.0              7.1                                                  250               88            77.4
         BOD                   25             30.1(Note1)           0.5              3.9                                                  230               49            33.6
                                                                                                                    Dry-off oven
          SS                   50                49                 0.1              7.5                                                  250               40            25.3
      Oil content              5.0               1.0                0.5              0.6                                                  0.25            0.028          0.007
      Cadmium                  0.1              0.01               0.01             0.01                                                   0.3             0.1           0.014
         Lead                  0.1             0.005              0.005            0.005                                                   0.2               0              0
                                                                                                                    Dry-off oven
 Hexavalent chrome             0.5              0.04               0.04             0.04                                                  0.35            0.011          0.004
Note1: Though BOD exceeding the regulated value were detected, the
average measured values in the drainage ditch is low enough as 1.5 and the
results of examinations afterward showed values less than the regulated value.
This highest value is estimated to be because of an accident involving a water-
purifier tank, so the management of water-purifier tanks was reinforced.

   Yajima Plant
[Location] 1-1,Shoya-machi, Ohta, Gunma                                                      ●Air Pollution Data
                                                                                              Regulation; Air Pollution Control Law
[Site area (building area)] 550,000m2(200,000m2)
                                                                                                Substance             Facilities      Regulated valves    Maximum        Average
[Products manufactured] Automobiles (Legacy, Impreza, Forester models)
[Number of employees] 2,482                                                                        SOx                 Boiler             63.2             0.12           0.11
●Water Pollution Data                                                                                                                     150              105            105
  Discharge; Public rivers Regulation; Pollution Control Law, Gunma Prefectural Ordinances                             Boiler             180               71             66
      Substance          Regulated values      Maximum          Minimum           Average          NOx                                    230              120            109
          pH                 5.8-8.6              7.6               6.9              7.2                                                  230               55             25
                                                                                                                    Dry-off oven
         BOD                   25                12.3               1.2              4.6                                                  250               20             18
          SS                   50                23.9               0.1              5.8                                                  0.25            0.007          0.004
      Oil content              5.0                0.7               0.5              0.5                                                  0.30            0.006          0.004
      Cadmium                  0.1              0.001             0.001            0.001            PM                                     0.2             0.06           0.01
                                                                                                                    Dry-off oven
         Lead                  0.1              0.005             0.005            0.005                                                  0.35            0.025          0.016
 Hexavalent chrome             0.5               0.04              0.04             0.04                               Boiler             63.2             0.12           0.11

   Ohta North Plant
                                                                                             [Location] 27-1,Kanayama-machi, Ohta, Gunma
●Water Pollution Data                                                                        [Site area (building area)] 40,000m2(30,000m2)
  Discharge; Public rivers Regulation; Pollution Control Law, Gunma Prefectural Ordinances
                                                                                             [Products manufactured] Automotive parts
      Substance          Regulated values      Maximum          Minimum           Average
                                                                                             [Number of employees] 149
          pH                 5.8-8.6              7.5               6.8              7.1     ●Air Pollution Data
         BOD                   25                10.2               0.3              3.9      Regulation; Air Pollution Control Law
          SS                   50                 5.2               0.1              3.4         Substance             Facilities      Regulated valves   Maximum        Average
      Oil content              5.0                1.0               0.5              0.6                                Boiler              250              77            66
      Cadmium                  0.1              0.001             0.001            0.001                             Dry-off oven           230              25            25
         Lead                  0.1              0.005             0.005            0.005                                Boiler               0.3           0.017         0.007
 Hexavalent chrome             0.5               0.04              0.04             0.04                             Dry-off oven           0.35           0.012         0.009

   Oizumi Plant
                                                                                             [Location] 1-1-1, Izumi, Oizumi-machi, Oragun, Gunma
                                                                                             [Site area (building area)] 410,000m2(180,000m2)
●Water Pollution Data                                                                        [Products manufactured] Automotive engines, transmissions
  Discharge; Public rivers Regulation; Pollution control Law, Gunma Prefectural
  Ordinances, Pollution Control agreement with Ohta-city and Oizumi-machi                    [Number of employees] 1,672
      Substance          Regulated values      Maximum          Minimum           Average    ●Air Pollution Data
                                                                                              Regulation: Air Pollution Control Law, Pollution Control Agreement with Ohta-city and
          pH                 5.8-8.6              7.4               6.8              7.1      Oizumi-machi
         BOD                   10                 5.6               0.6              2.2         Substance             Facilities      Regulated valves   Maximum        Average
          SS                   10                 8.8               0.6              3.1                                Boiler              150             137           101
      Oil content              3.0                0.5               0.5              0.5                          Melting furnance          180             122            64
      Cadmium                  0.1              0.001             0.001            0.001                                Boiler              0.25           0.005         0.002
         Lead                  0.1              0.026             0.014             0.02                          Melting furnance           0.2            0.04         0.013
 Hexavalent chrome             0.5               0.04              0.04             0.04          Dioxins               Oven                 20            0.013         0.011

●Water Pollution [Notations]—pH: Hydrogen-ion concentration, BOD: Biochemical oxygen demand, SS: Concentration of suspended solids in water
                 [Units]—mg/l, except pH
●Air Pollution   [Notations]—HCL: Hydrogen chloride                                                                                                                                   49
                 [Units:]—SOx: m3N/h, NOx: ppm, PM: g/m3N, HCL: g/m3N, Dioxins: ng-TEQ/m3N
 [Data measurement] April 2001-March 2002

     Utsunomiya Manufacturing Division
     Transportation and Ecology Systems Division
      Main Plant
 [Location] 1-1-11, Yonan, Utsunomiya, Tochigi                                                            ●Air Pollution Data
                                                                                                           Regulation; Air Pollution Control Law
 [Site area (building area)] Transportation and Ecology Systems:                                              Substance             Facilities        Regulated valves    Maximum    Average
 170,000m2(70,000m2), Aerospace: 190,000 m2(80,000m2)                                                                                 Boiler                 8              3.55      0.65
 [Products manufactured] Transportation and Ecology Systems: Rolling stock, car
                                                                                                                 SOx                  Oven                   8              1.04      0.17
 trailers, refuse collection vehicles, environmental equipment, Aerospace: Aircraft, unmanned air-
                                                                                                                                   Incinerator               8              1.85      1.85
 craft, space-related equipment
 [Number of employees] Transportation and Ecology Systems: 425, Aerospace: 1,742                                                                           250               86        80
                                                                                                                                                           230               67        67
 ●Water Pollution Data                                                                                           NOx
                                                                                                                                                           180               85        72
     Discharge; Public sewage works Regulation; Sewerage Water Law and the Utsunomiya City                                                                 150               78        78
                                                                                                                                                           230              100        49
         Substance           Regulated values      Maximum                Minimum           Average                                   Oven
                                                                                                                                                           160               65        57
             pH                  5-9                   8.5                  6.0               7.2
                                                                                                                                                            0.3            0.015     0.008
            BOD                  600                  447                    3                88                                      Boiler
                                                                                                                                                           0.25            0.009     0.007
             SS                  600                  140                    1                45                  PM                                        0.2            0.004     0.002
         Oil content              5                    3.5                 <0.5               0.9                                     Oven
                                                                                                                                                            0.1            0.012     0.008
         Cadmium                 0.1                 0.012                <0.005            0.006                                  Incinerator              0.5            0.047     0.047
          Cyanide                 1                  0.033                <0.005            0.017                HCL               Incinerator             700               74        74
     Hexavalent chrome           0.1                 0.059                <0.005             0.01               Dioxins            Incinerator              80               7.5       7.5
       Total chrome               2                   0.17                <0.05              0.06         Note: The incinerator was eliminated in September 2001.

      South Plant
 ●Water Pollution Data
     Discharge; Public sewerage works Regulation: Sewerage Water Law and the Utsunomiya City Ordinances   [Location] 1388-1, Esojima ,Utsunomiya, Tochigi
          Substance            Regulated values   Maximum             Minimum             Average         [Site area (building area)] 140,000m2(30,000m2)
              pH                   5-9               8.6                6.6                 7.2
                                                                                                          [Products manufactured] Aircraft
                                                                                                          [Number of employees] 500
             BOD                   600              400                 4.1                 95
              SS                   600              183                <1.0                 36            ●Air Pollution Data
          Oil content               5                2.1               <0.5                 0.7            Regulation; Air Pollution Control Law
          Cadmium                  0.1             <0.005             <0.005              <0.005              Substance              Facilities       Regulated valves    Maximum    Average
           Cyanide                  1              <0.005             <0.005              <0.005                 SOx                  Boiler                8               0.48      0.35
     Hexavalent chrome             0.1             <0.005             <0.005              <0.005                 NOx                  Boiler               180              113       107
        Total chrome                2               0.13              <0.05                0.06                   PM                  Boiler               0.3             0.003     0.003

      South No.2 Plant
 ●Water Pollution Data                                                                                    [Location] 2-810-4, Miyanouchi, Utsunomiya, Tochigi
     Discharge; Public sewerage works Regulation: Sewerage Water Law and the Utsunomiya City Ordinances
          Substance            Regulated values   Maximum             Minimum             Average
                                                                                                          [Site area (building area)] 100,000m2(20,000m2)
                                                                                                          [Products manufactured] Aircraft
              pH                   5-9               8.6                6.4                  7.3
                                                                                                          [Number of employees] 254
             BOD                   600              447                 2.4                  80
              SS                   600              125                <1.0                  25
          Oil content               5                3.5               <0.5                  0.9
          Cadmium                  0.1             <0.005             <0.005              <0.005          ●Air Pollution Data
           Cyanide                  1              <0.005             <0.005              <0.005           Regulation; Air Pollution Control Law
     Hexavalent chrome             0.1              0.03              <0.005               0.008            Substance            Facilities         Regulated valves      Maximum    Average
        Total chrome                2                1.4              <0.05                 0.29               SOx                Boiler                   8               0.77       0.42

      Handa Plant
 ●Water Pollution Data                                                                                    [Location] 1-27, Shiohi-cho, Handa, Aichi
     Discharge; Public rivers Regulation: Water Pollution Control Law, Aichi Prefectural Ordinances,      [Site area (building area)] 50,000m2(10,000m2)
     Handa City Ordinances, and Pollution Control Agreements with Handa City
                                                                                                          [Products manufactured] Aircraft
          Substance            Regulated values   Maximum             Minimum             Average         [Number of employees] 85
              pH                    6-8              7.8                 7                  7.4
             BOD                    25               3.6                1.4                 2.6
              SS                    25                3                <1.0                 1.6           ●Air Pollution Data
          Oil content                5               0.5               <0.5                 0.5             Regulation; Air Pollution Control Law
          Cadmium                   0.1            <0.005             <0.005              <0.005               Substance             Facilities        Regulated valves    Maximum   Average
           Cyanide                   1              <0.1               <0.1                <0.1                   SOx                  Boiler               1.5              0.21      0.19
     Hexavalent chrome              0.5            <0.04              <0.04               <0.04                   NOx                  Boiler               180              100        93
        Total chrome                 2             <0.04              <0.04               <0.04                   PM                   Boiler               0.1             0.002     0.002

                                      ●Water Pollution [Notations]—pH: Hydrogen-ion concentration, BOD: Biochemical oxygen demand, SS: Concentration of suspended solids in water
                                                       [Units]—mg/l, except pH
50                                    ●Air Pollution   [Notations]—HCL: Hydrogen chloride
                                                       [Units:]—SOx: m3N/h, NOx: ppm, PM: g/m3N, HCL: g/m3N, Dioxins: ng-TEQ/m3N
                                                                                                        PLANT SITE DATA       [Data measurement] April 2001-March 2002

Saitama Manufacturing Division
Bus manufacturing and House Prefabricating Division, Tokyo Office
   Saitama Manufacturing Plant
[Location] 4-410, Asahi, Kitamoto, Saitama
[Site area (building area)] 80,000m2(60,000m2)
[Products manufactured] General-purpose engines (Robin
engines), engine generators, engine pumps
[Number of employees] 576
●Water Pollution Data
  Discharge; Public sewage works Regulation: Kitamoto City Ordinances
                                                                                          ●Air Pollution Data
     Substance          Regulated values   Maximum       Minimum        Average            Regulation; Saitama Prefectural Pollution Control ordinances
         pH                 5-9             8.6            6.0           7.4                   Substance            Facilities      Regulated valves   Maximum   Average
        BOD                 600             374            74            194                      PM               Incinerator             0.25         0.185    0.185
         SS                 600             147            24             85                      HCL              Incinerator             500           270      270
     Oil content             30             6.8            1.0           4.2                    Dioxins            Incinerator              80           5.2      5.2
                                                                                          Note: The incinerator was eliminated in September 2001.

   Bus Manufacturing and House Prefabricating Division
[Location] 100 Suehiro-cho, Isezaki, Gunma
[Site area (building area)] 150,000m2(60,000m2)
[Products manufactured] Bus bodies, prefabricated houses
[Number of employees] 360
●Water Pollution Data
  Discharge; Public sewage works Regulation: Isezaki City Ordinances
     Substance          Regulated values   Maximum       Minimum        Average
         pH               5.7-8.7             8.6           7.3           8.1
        BOD                 300              130            22            88
         SS                 300              160            20            88              ●Air Pollution Data
     Oil content              5             <2.0          <2.0          <2.0                Regulation; Air Pollution Control Ordinances
        Zinc                  5              0.14          0.02          0.05                  Substance            Facilities      Regulated valves   Maximum   Average
     Soluble iron            10              0.25          0.06          0.16                     SOx                 Boiler         1/10 or less of All regulated values
    Total chrome              2              0.01         <0.01          0.01                     NOx                 Boiler            180           71            62
        Lead                0.1             <0.01         <0.01         <0.01                     PM                  Boiler            0.3         0.012         0.009

   Tokyo Office
[Location] 3-9-6 Osawa, Mitaka Tokyo
[Site area (building area)] 160,000m2(80,000m2)
[Number of employees] 910
●Water Pollution Data                                                                     ●Air Pollution Data
  Discharge; Public sewage works Regulation: Mitaka City Ordinances                         Regulation; Tokyo Pollution Control Ordinances
     Substance          Regulated values   Maximum       Minimum        Average               Substance             Facilities     Regulated valves    Maximum   Average
         pH               5.7-8.7            8.4            7.2           8.1                     SOx                Boiler           0.731            0.097     0.044
        BOD                 300             180              6            50                     NOx                 Boiler             90               76        70
         SS                 300             130              9            43                                                            0.3            0.011      0.06
     Oil content              5               4             ND            ND                      PM                 Boiler            0.25            0.014     0.007
     Manganese               10             0.14            ND           0.03                                                          0.15            0.003     0.003
Note: ND shows Not Detected.

●Water Pollution [Notations]—pH: Hydrogen-ion concentration, BOD: Biochemical oxygen demand, SS: Concentration of suspended solids in water
                 [Units]—mg/l, except pH
●Air Pollution   [Notations]—HCL: Hydrogen chloride                                                                                                                         51
                 [Units:]—SOx: m3N/h, NOx: ppm, PM: g/m3N, HCL: g/m3N, Dioxins: ng-TEQ/m3N
 Product data

                                                                                                    Legacy               Legacy                Impreza
                                                                                                                                                                      Forester              Forester            Pleo Nesta            Sambar Van
                                                               Model                               Lancaster          Touring Wagon          Sports Wagon

                                                                                                  Lancaster 6          GT-B E-tuneII            I's Sport               X20                    XT                    G                    VB
        Date sales began                                                                            2001/5                2001/5                2001/9                2002/2                2002/2               2001/10                2002/2
        Maximum passenger capacity                                                                     5                     5                     5                      5                    5                     4                    2(4)
        Vehicle type                                                                               LA-BHE                GF-BH5                LA-GG3                 LA-SG5               LA-SG5                TA-RA2                GD-TV2
                                       Model                                                         EZ30                  EJ20                  EJ20                  EJ20                  EJ20                 EN07                  EN07
                                       Displacement ( l )                                            2.999                1.994                 1.493                  1.994                 1.944                0.658                 0.658

                                                                                                  Horizontally          Horizontally                                                   opposed 4-cylinder,     Water-cooled
                                                                                                                                             Horizontally           Horizontally                                                     Water-cooled
                                                                                                   opposed                opposed                                                       2.0 L, DOHC, 16-       4-cycle in-line
                                                                                                                                               opposed                opposed                                                        4-cycle in-line
                                       Type                                                    6-cylinder, DOHC      4-cylinder, DOHC                                                   valve, air-cooled    4-cylinder, SOHC
                                                                                                                                           4-cylinder, 1.5 L,     4-cylinder, 2.0 L,                                               4-cylinder, SOHC
                                                                                               24-valve, variable    16-valve, 2-stage                                                  intercooler turbo       intercooler
                                                                                                                                           SOHC, 16-valve         SOHC, 16-valve                                                   natural aspiration
                                                                                               induction system          twin turbo                                                      (variable valve        mild charge

                                       Drive system                                                   4WD                  4WD                   4WD                    4WD                   4WD                  4WD                   4WD

                                       Transmission                                                   4AT            Sport shift 4 AT             4AT                   4AT                   4AT                 i-CVT                  5MT
        Weight (kg)                                                                               1580-1590            1530-1570                 1290               1340-1360             1410-1430                 940                900-910
        Maximum load capacity (kg)                                                                    -                     -                     -                     -                     -                     -                 350 (250)
                                 consumption rate

                                                          10-15 mode fuel economy
                                                                   (km/l)                             10.6                 10.6                  13.4                   13.0                 13.0                  18.0                  16.6

                                                            CO2 emissions (g/km)                     222.5                222.5                 176.0                  181.4                 181.4                131.0                 142.1
                                                           Reference: FY 2010 fuel
                                                         economy standard achieved
                                                             Regulations adopted                  Year 2000             Year 2000             Year 2000             Year 2000             Year 2000             Year 2000             Year 2002
                                                                                                  standards             standards             standards             standards             standards             standards             standards
                                                             Certification level of              Excellent low           Good low              Good low              Good low              Good low              Good low            Excellent low
                                                            low emission vehicles               emission vehicle      emission vehicle      emission vehicle      emission vehicle      emission vehicle      emission vehicle      emission vehicle
                                     Exhaust emissions

                                                            10-15         CO (g/km)                   0.67                 0.67                  0.67                   0.67                 0.67                  0.67                  3.30
                                                                          HC (g/km)                   0.04                 0.06                  0.06                   0.06                 0.06                  0.06                  0.07
                                                           figures        NOx (g/km)                  0.04                 0.06                  0.06                   0.06                 0.06                  0.06                  0.07
                                                                      Low-pollution vehicle
                                                                      system designated by            (LEV)                                                                                                                               (LEV)
                                                                      seven Kanto area                                     (TLEV)                (TLEV)                 (TLEV)               (TLEV)                (TLEV)
                                                                      prefectures and cities
                                                                      LEV-6 designation by
                                                                      six Keihanshin area             (LEV)                (TLEV)                (TLEV)                 (TLEV)               (TLEV)                (TLEV)                 (LEV)
                                                                      prefectures and cities
     Environmental information

                                                             Regulations adopted                   Year 1998             Year 1998             Year 1998             Year 1998             Year 1998             Year 1998             Year 2000

                                                                                                   standards             standards             standards             standards             standards             standards             standards
                                                           Acceleration noise
                                                           regulation figures (dB-A)                   76                   76                    76                     76                    76                   76                    76
                                                                                                  HFC134a               HFC134a               HFC134a                HFC134a              HFC134a               HFC134a               HFC134a
                                 Air condi-

                                                              Type of refrigerant

                                                          Amount of refrigerant used (g)              450                   450                   500                   600                   600                   450                   400
                                                                                                 JAMA year 2005       JAMA year 2005       JAMA year 2005       JAMA year 2005       JAMA year 2005       JAMA year 2005       JAMA year 2005
                                                                                                  target achieved      target achieved      target achieved      target achieved      target achieved      target achieved      target achieved
                                                          Amount of lead used
                                                                                               (less than one-third (less than one-third (less than one-third (less than one-third (less than one-third (less than one-third (less than one-third
                                                                                               of year 1996 levels) of year 1996 levels) of year 1996 levels) of year 1996 levels) of year 1996 levels) of year 1996 levels) of year 1996 levels)

                                                                                               Display of material   Display of material   Display of material   Display of material   Display of material   Display of material   Display of material
                                                          Design to improve                    symbols on plastic    symbols on plastic    symbols on plastic    symbols on plastic    symbols on plastic    symbols on plastic    symbols on plastic
                                                          recyclability                         and rubber parts      and rubber parts      and rubber parts      and rubber parts      and rubber parts      and rubber parts      and rubber parts
                                                                                                   over 100g             over 100g             over 100g             over 100g             over 100g             over 100g             over 100g

                                                                                                 Use of materials       Use of materials      Use of materials     Use of materials     Use of materials     Use of materials   Use of materials
                                                                                                   recycled from          recycled from      recycled from PET from clothing scraps from clothing scraps       recycled from      recycled from

                                                                                                collected bumpers, collected bumpers, bottles for insulators      for interior plastic for interior plastic collected bumpers, clothing scraps for
                                                          Use of recycled materials
                                                                                                 PET bottles, and       PET bottles, and and from used paper parts and from used parts and from used PET bottles, and           sound insulators
                                                                                                clothing scraps for clothing scraps for         for vibration    paper for vibration   paper for vibration clothing scraps for and from collected
                                                                                               interior plastic parts interior plastic parts absorbing materials absorbing material absorbing materials interior plastic parts bumpers for covers

                                                                                                                                              Use of easily                                                  A lot of Use of
                                                                                       Polyurethane seat Polyurethane seat                                        Polyurethane seat Polyurethane seat                          Fit-in type Glove box
                                                                                                                                             -recycled TPO                                                 easily-recycled PP
                                                                                      pad is placed on top pad is placed on top                                  pad is placed on top pad is placed on top                      is placed on top of
                                                                                                                                                plastic for                                                     plastic for
                                                          Matters for special mention   of the pan frame     of the pan frame                                      of the pan frame     of the pan frame                      the instrument panel
                                                                                                                                           instrument panel,                                               instrument panel,
                                                                                            facilitating         facilitating                                          facilitating         facilitating                              facilitating
                                                                                                                                             door trim, and                                                  door trim, and
                                                                                        disengagement        disengagement                                         disengagement        disengagement                             disengagement
                                                                                                                                                  others                                                          others

                                                                                                                                             RELATED DATA

      General-Purpose Engines
Subject                                            General-purpose engine                       Exhaust emissions regulations             Category               Class            Regulation values
  Designation                            EX13         EX17           EX21     EX27               EPA 2002 Regulations                                         Class 1          CO (g/kW-h)       519
                                                                                                                                                            (lower than
                                        Air-cooled 4-stroke slant-type single-                  (by July 2002) (Phase I)                                       225cc)        HC+NOx (g/kW-h)     16.1
  Engine type
                                            cylinder OHC gasoline engine                         EPA 2002 Regulations                                         Class 2          CO (g/kW-h)       610
                                                                                                                                                             (225cc or
  Maximum output                        3.2(4.3) 4.2(5.7) 5.1(7.0) 36.6(9.0)                          (Phase II)                                               higher)       HC+NOx (g/kW-h)     16.6
  kW(ps)/rpm                             /4000    /4000    /4000    /4000                        EPA 2003 Regulations                                         Class 1          CO (g/kW-h)       610
                                                                                                                                                            (between 100
  Total Displacement (l)                 0.126        0.169          0.211    0.265          (after August 2003) (Phase II)                                 cc and 225cc)    HC+NOx (g/kW-h)     16.1
  Dry mass (kg)                            14           15            16       21             EPA After 2005 Regulations                                      Class 2          CO (g/kW-h)       610
                                                                                                                                                             (225cc or
             Conformity to EPA 2002
                   regulations          Conforms Conforms Conforms Conforms                           (Phase II)                                               higher)       HC+NOx (g/kW-h)     12.1

            Conformity to CARB 2002

                   regulations          Conforms Conforms Conforms Conforms                                                                                  between 65cc      CO (g/kW-h)       549
                                         413.8        394.6          393.5    432.8                                                                           and 225cc
            EPA certifi- CO (g/kW-h)                                                         CARB After 2002 Regulations             Small off-road            Horizontal    HC+NOx (g/kW-h)     16.1
            cation index  HC+NOx
                          (g/kW-h)        10.8          9.8           8.2      8.0                     (Tier II)                       engine                                  CO (g/kW-h)       549
                                                                                                                                                                225 or

                    dB (A)                71.4          72.7         74.2     74.8                                                                                           HC+NOx (g/kW-h)     12.0
                                                                                             Note:1) EPA Phase I is a regulation for new engines.
                                                                                                     EPA Phase II and CARB Tier II are regulations for deterioration.
                                                                                                  2) EX13, EX17 and EX21 are subject to Class 1, and EX27 is subject to Class 2.
Other data
                                                                                                                                      Number of Employees Receiving Environmental
      Acquisition of ISO 14001 Certification                                                                                          Education by Level (Fiscal 2001)
                                                                                                                                                                                   Number of employees
                                    Business location                                                    Date certificated                   Type of education or training          receiving education

                                                     Main Plant                                                                      Education for new hires                                          351
                                                     Yajima Plant                                                                    Education for persons newly promoted                        1,418
  Gunma Manufacturing Division                       North Plant                                          March 24, 2002             Total                                                       1,769
                                                     Oizumi Plant
                                                     Subaru Research and Experimental Center
  Saitama Manufacturing Division                                                                           May 21, 1999
                                                     Main Plant
  Utsunomiya Manufacturing Division,                 South Plant
  Transportation and Ecology Systems                                                                       July 2, 1999
  Division                                           No. 2 South Plant
                                                     Handa Plant

      Qualified Personnel in Pollution Control Management
                                                                                                                                                                                 (As of March 31, 2002)
                                                Qualification type                                                        Total number of personnel holding qualification
                                                                               Chief managers                                                     4
                                                                                                      First type                                  5
                                                                                                      Second type                                 5
                                                                                                      Third type                                 27
                                                                                                      Fourth type                                14
  Pollution Control Managers                                                                          First type                                  6
                                                                               Water-related          Second type                                19
                                                                                                      Third type                                 10
                                                                               Noise-related                                                     43
                                                                               Vibration-related                                                 30
                                                                               Tokyo Pollution Control Managers                                   2
                                                                               Heat Management                                                   12
  Energy Management Experts
                                                                               Electronic Management                                             11
  Working Environment Measurement Expert                                                                                                          2
  Technical Manager for Industrial Waste                                                                                                         14
  Management Representative for Industrial Waste Subject to Special Control                                                                      23
  Internal Environmental Auditor (internal qualification)                                                                                       375

                           Management Division                                              Automobile Division                                                       Other Divisions
                                                                                                                                                       Developed and manufactured the Load-Packer refuse
                                                                                                                                                       collection vehicle in technological cooperation with the
 1962 March
                                                                                                                                                       Garwood Industries Inc; the name was later changed to Fuji

 1966 May                                                                         Introduced all aluminum block engine

                                                                                                                                                       Installed waste disposal equipment in Japan National
                                                                                                                                                       Railways' series 14 sleeping cars

                                                                                  Established standards for making resin ingredients (automobile
 1973 August
                                                                                  industry guidelines were decided in 1991)

                                                                                                                                                       Successfully completed the new "KRT" traffic system at
 1975 July
                                                                                                                                                       Okinawa Ocean Expo

                                                                                  Developed the Subaru Exhaust Emission Control-Thermal
 1977 March                                                                       (SEEC-T) system, to comply with the 1978 Exhaust Emissions
                                                                                  regulations, in the new Subaru Leone

                                                                                                                                                       Began sales of the LE-Car (rail bus), a comprehensive product
 1982 April
                                                                                                                                                       for bus bodies and railway technology

                                                                                                                                                       Completed the first model of an articulated bus. 100 vehicles
 1984 May
                                                                                                                                                       were displayed at the 1985 Tsukuba Science Exposition

        September                                                                 Began recycling by mixing waste paper in antivibration sheet

                                                                                                                                                       Began sales of three types of the OHV engine (EH11, EH15,
 1985 January

        October                                                                                                                                        Began sales of the electric refuse collection vehicle EV405

 1986 November                                                                    Began sales of the lightweight plastic valve rocker cover

                                                                                  Introduced the Subaru ECTV, the first electro-continuously
 1987 February
                                                                                  variable transmission in the world

                                                                                                                                                       Delivered the world's first pendulum-type express diesel car
 1989 January
                                                                                                                                                       (Series 2000) to JR Shikoku

                    Established an "Environmental Issue improvement Measures      Began setting up facilities at dealership for collection and reuse
 1990 August
                    Project"                                                      of CFCs used in air-conditioners

                    Established the Safety, Emission, Fuel Economy (SEF)
 1991 April

                    Established the Recycling Committee (in 1997 the name was
        October     changed to the Recycling Engineering Development Committee,   Announced a Flexible Fuel engine at the Tokyo Motor Show
                    and in 1999 to the Recycling Promotion Committee)

                    Established the Environmental and Safety Technology                                                                                Began sales of three types of generations installed with the
 1992 April
                    Department                                                                                                                         OHV engines (2kW, 2.8kW, 4.1kW)

                                                                                  Became the first in the automobile industry to recycle painted
                                                                                  bumpers for use in interior and exterior parts

        September                                                                 Developed the first plastic intake manifold in Japan

                                                                                  Completed replacement of air-conditioner refrigerants from
                                                                                  CFC12 to HFC134a

                                                                                  Began collecting scrapped bumpers in the Tokyo and
 1993 January
                                                                                  Kanagawa areas in cooperation with distribution company

                    •Established "Voluntary Environmental Protection Plan"
                    •Set up the Corporate Environment Committee
                                                                                                                                                       Used alternative CFCs for the cooling unit in the 1993 model
        March       •Set up the Engineering Environment Committee developed
                                                                                                                                                       Kiha 150
                    from the SEF Committee, and set up the Plan Environment
                    Committee developed from the "SEF Committee"

                                                                                  Completed replacement of air-conditioner refrigerants from
 1994 April
                                                                                  CFC12 to HFC134a

                                                                                                                                                       Delivered the low-pollution CNG bus to Tokyo, Yokohama,
        December                                                                                                                                       Kawasaki, Osaka and Nagoya cities (in cooperation with
                                                                                                                                                       Nissan Diesel Motor Co.)

                                                                                                                                                       Began manufacturing general-purpose engines that meet the
 1995 January
                                                                                                                                                       California Air Resources Board (CARB) emission regulations

                    The Saitama Manufacturing Division in the rural area were
                    completed operations began in April.

                                                                                                                                                       Began sales of car rack system and car pallet system for
                                                                                                                                                       vehicle transportation by railway

        April                                                                     Began sales of the electric vehicle "Sambar EV"

                                                                                  Developed a new environment-friendly protective coating film
                                                                                  and adopted it for the Legacy and Impreza

        August                                                                                                                                         Began delivering a low-pollution CNG refuse collection vehicle

                                                                                                                                                       Delivered Japan's first container for refuse transportation by
        September                                                                                                                                      railroad freight car and a container transport vehicle for
                                                                                                                                                       transportation to Kawasaki City

                                                                                  Displayed a gasoline direct injection engine and a hybrid
                                                                                  electric vehicle at Tokyo Motor show

                                 FHI ENVIRONMENTAL CHRONOLOGY
                        Management Division                                                 Automobile Division                                                    Other Divisions
                                                                                  Developed and implemented the Roller Press method, a new
1996 February                                                                     technique for removing the coating film, and began bumper-to-
                                                                                  bumper recycling

                                                                                                                                                   Made the first successful flight of helicopter equipped with the
    March                                                                                                                                          new main rotor system, Fuji Bearingless Rotors (FBR)
                                                                                                                                                   developed independently.

    April       Established the Environment Plan for 2000

                                                                                                                                                   Developed and began sales of the container collection and
                                                                                                                                                   measurement system for refuse collected for a fee

                                                                                                                                                   Delivered a user-friendly non-step city bus to Osaka and
1997 February
                                                                                                                                                   Tokyo (in cooperation with Nissan Diesel Motor Co., Ltd.)

    July        Set up the Environmental Affairs Promotion Office                                                                                  Developed a solid waste ash melting furnace

                                                                                                                                                   Delivered the first Fuswton, high-rise building waste
                                                                                                                                                   management system

                Established "Recycling initiative for End-of-Life Vehicle
1998 February
                Voluntary Action Plan for Automobile Recycling"

                                                                                                                                                   Began sales of the four-stroke OHV engine (EH09D) used in
    April       Established Environmental Guidelines
                                                                                                                                                   rammers, an alternative to two-cycle engine

                Published the environmental pamphlet "For Harmony between
                People, Society and the Earth"

                                                                                  Completed nationwide extension of JAMA's CFC12 collection
                                                                                  and destruction system

    November    SIA in the U.S. acquired ISO 14001 certification

1999 March      Gunma manufacturing Division acquired ISO 14001 certification

    May         Saitama Manufacturing Division acquired ISO 14001 certification

    June                                                                          Began recycling plastic bottles for use in interior parts

                •Utsunomiya Manufacturing Division and Transportation and
                Economy Systems Division acquired ISO 14001 certification
                •Hosted first Affiliated Companies Environmental Problems

                Started "EnvironmenGeneral Manager Meeting" at Gunma
                Manufacturing Division

                                                                                  Began use if recycled material from production process painted   Began sales of the "Caring Family" Fuji nursing rooms,
2000 January
                                                                                  bumper waste material for the Pleo's mass-produced bumpers       reusable as rentals

                                                                                                                                                   Fuswton won the Resource Recycling Technology System
                                                                                  Expanded scrap bumper collection system to Tohoku area, built
    March       Eliminated the incinerator at the Tokyo Office                                                                                     Award for fiscal 1999 from the Ministry of International Trade
                                                                                  a nationwide system in Japan
                                                                                                                                                   and Industry's Environment and Industrial Location Bureau

                                                                                  Began sales of new type Impreza all models meet low emission
                                                                                  authorized standards

                Published 2000 Environmental Report, aggregating results of all
                environmental activities for fiscal 1999

                                                                                  Began recycling of auto window glass recovered from ELVs as
                                                                                  glass wall soundproofing material

                                                                                                                                                   •Unveiled Subaru Small Wing Turbine Generator System
                                                                                                                                                   •Began sales of new "LP0" low-noise refuse collection vehicle

                Eliminated the Incinerator at Gunma Manufacturing Division
    December                                                                      Began sales of "New Sambar EV" electric vehicle
                Yajima Plant

2001 March      Achieved zero emissions at Gunma manufacturing Division

                Explained FHI's partners and suppliers on the Green               Developed an electrodeposition coating analyzing software in
                Procurement Guideline (Industrial Products Division)              collaboration with Delight Co., Ltd.

                                                                                                                                                   •Robin began sales of general-purpose engines, EX series in order to
                                                                                                                                                   lower exhaust emissions to deal with EPA Phase regulations, lower the
    May                                                                                                                                            level of noises and lower the level of vibration.
                                                                                                                                                   •50,000 of production in cumulative total of the refuse collection
                                                                                                                                                   vehicle, Fuji Mighty was achieved.

                Published 2001 Environmental Report, aggregating results of all
                environmental activities for fiscal 2000.

                •Eliminated the incinerator at Utsunomiya Manufacturing
    September   Division.
                •Eliminated the incinerator at Saitama Manufacturing Division.

                                                                                  Exhibited the next generation hybrid mini car, HM-01 in Tokyo
                                                                                  Motor Show.


                                                                                                                                                   Subaru Small Wind-Power Generation System won New
2002 January                                                                                                                                       Energy Grand Prize of fiscal 2001 from the Agency of
                                                                                                                                                   Resources and Energy.

                                                                                  Began sales of New Forester. All models meet the fiscal 2010
                Gunma Manufacturing Division took a renewal investigation for
    February                                                                      fuel economy standards and accepted to be good low
                ISO14001. (Renewed in March)
                                                                                  emissions vehicles (G-LEV).

                •Utsunomiya Manufacturing Division, Transportation and
                Ecology Systems Division and Saitama Manufacturing Division                                                                        Delivered the first car of CVSR, the organic resources
                achieved the zero emissions.                                                                                                       collection and separation vehicle.
                •Utsunomiya Manufacturing Division opened the Recycling Center.


 ASR (Automobile Shredder Residue)                                             Greenhouse gases
 After disposal of fuel, oil, and the like by end-of-life vehicle              These are gases (CO2, methane, freon alternatives, and others) that
 dismantlers, the engines, transmissions, tires, batteries, and other          absorb the heat (infrared rays) released by the sun-warmed surface of
 parts are separated and the remaining bodies and other parts are              the earth and cause global warming. Greenhouse gases absorb heat
 dispatched to a shredding facility. They are turned into shredder             and warm the air, but as their density increases more heat is absorbed
 residue after steel and nonferrous metal particles are separated out for      and air temperature rises, resulting in global warming.
 recycling. Recycling technology for this residue is now under
 development.                                                                  Law on Promoting Green Purchasing
                                                                               This is legislation that provides procurement of environmentally aware
 Dioxins                                                                       products by ministries, agencies, and other central government
 This is a generic term that denotes polychlorinated dibenzo-p-dioxin          bodies. The items covered in fiscal 2001 are 101 products in 14
 (PCDD) and polychlorinated dibenzofuran (PCDF). Depending on the              categories, including office supplies, OA equipment, and automobiles.
 location and number of occurrences of chlorine there are many types           The law went into force in April 2001.
 whose degree of harmfulness varies. There are some that cause
 deformities and some that are carcinogenic. Dioxins appear                    Modal shift
 unnoticeably in the manufacture of chemical substances and their              This refers to conversion of the transportation configuration with a
 combustion. In the Law Concerning Special Measures against Dioxin             view to enhancing energy efficiency in distribution and making
 (promulgated in July 1999), PCDD and PCDF, including coplanar                 restrictions on emissions of exhaust gas and the like more effective.
 PCB, are defined as dioxins.
                                                                               MSDS (Material Safety Data Sheet)
 End-of-life vehicles                                                          This details the properties and other data for the chemical substance
 Automobiles, including motorbikes, whose use for transportation has           concerned and is used to ascertain the substance's safety and
 ended, are dismantled, destroyed, burned, disposed of in landfills, or        harmfulness.
 otherwise dispose of.
                                                                               PRTR Law (Law Concerning Reporting of the Release into the
 End-of-life vehicles checklist (manifest) system                              Environment of Specific Chemical Substances and Promoting
 The checklist (manifest) system, which attests to the completion of           Improvements in Their Management)
 appropriate disposal of end-of-life vehicles and industrial waste from        This legislation requires ascertaining the situation of chemical substance
 car dealers, was applied starting in December 1998. Under this                emissions and reporting to the central government via local governments.
 system, the producer of waste exchanges checklists with the company           The amount of polluting substances emitted into the environment or
 commissioned to collect and dispose of it, and receives checklists            amount transferred as waste is registered, and tabulated and made
 from the latter after disposal is completed, enabling the waste               public by the government. Category 1 specified chemical substances
 producer to confirm appropriate disposal.                                     number 354. The law went into force in April 2001.

 Environmental impact                                                          Recycling-based society
 In the Environment Basic Law, this is "that which, as a result of human       As an alternative to the existing high-consumption, high-waste society,
 activity, affects the environment and is a cause of interference in           this is an economic society that aims at the simultaneous achievement
 environmental conservation."                                                  of environmental consideration and the pursuit of economic rationally
                                                                               through the reduction, reuse, and recycling of waste material,
 Environmental Management System (EMS)                                         restricting as much as possible the use of new resources and
 Environmental management system positions environmental                       minimizing the volume of emissions.
 conservation measures as one link in corporate activity and involves
 planning, implementation, and evaluation in this connection.                  Resource Effective Utilization Promotion Law
 Depending on the type of evaluation, measures are implemented to              This legislation, which went into force in April 2001, requires manufacturers
 achieve certain objectives. The organizational set-up for administering       to conserve resources and promote reuse and recycling in their products
 these operations is the EMS.                                                  and raw materials. The law covers 69 items, including home electrical
                                                                               appliances, automobiles, and personal computers.
 Food Recycling Law (Law Concerning Promoting to Recycle
 Recyclable Food Resources)                                                    Telematics
 As for food abandonment generated in volume as unsold                         This is a telecommunication system for automobiles. It connects
 merchandizes or table waste or in the food manufacturing process,             automobiles and telecommunication infrastructures with cellular
 this legislation requires food-related companies to promote recycling         phones or automobile phones and provides drivers with various kinds
 of recyclable food resources, in order to reduce the volume finally           of information such as traffic information and leisure information. In
 disposed of through prevention of food abandonment generation and             emergency situations, for example, in which an air bag unfolds, drivers
 reducing the volume, and recycle those food resources as raw                  can ask to call put emergency vehicles.
 materials for fertilizer, feeding stuff and other things. The law went into
 force in May 2001.                                                            Zero emissions
                                                                               This aims at building a recycling-based society in which the recycling
 Freon Law (Law on Promoting Collecting and Destroying Freon)                  of waste from industrial and other activities and the prevention of
 This legislation prohibits emitting chlorine compounds (generally called      waste generation results in a society with no waste. "Zero emissions"
 freon) into the atmosphere in vain because they cause ozone layer             has a variety of meanings, but for FHI it is activities that bring to the
 depletion and global warming, and requires collecting and destroying          zero level waste material disposed of in landfills.
 them appropriately at the time of disposal of machines.
 Chlorofluorocarbon (CFC), hydrochlorofluorocarbon (HCFC) and                  3Rs (Reduce, Reuse, Recycle)
 hydrofluorocarbon (HFC) that are used as refrigerant for car air-             As waste material countermeasures, the 3Rs require reductions in the
 conditioners and cold stores and air conditioners for business use are        volume of waste through product resource conservation, longer life of
 subject to this law. This law was effected in June 2001.                      products, and reduced generation of by-products in production
                                                                               processes (Reduce); reuse of components (Reuse); and recycling of
                                                                               components (Recycle).

 Please Let Us Know Your Opinions and Thoughts.
Thank you for reading Fuji Heavy Industries' Year 2002 Environmental Report.
This report focused primarily on measures implemented in fiscal 2001, ended
March 31, 2002, in our five business sectors: Automobile, Aerospace, Industrial
Products, Transportation and Ecology Systems, and Bus Manufacturing and
House Prefabricating. Besides, this report includes our affiliate companies'
activities for the first time.
Going forward, environmental reports will be published annually. We believe
that your opinions and thoughts will help make them more complete. So please
take a moment to fill in the questionnaire on the reverse side and fax it to us at
the number shown. Thank you in advance for your cooperation.

                                   Report on results of questionnaire
                                 on our Year 2001 Environmental Report

Our sincere thanks to the many who completed last year's questionnaire (published in June 2001). These
are the results.

1. About the 2001 Environmental Report
                                                                                                          graph 1                                                                           graph 2
  (1) Were the contents of this report sufficient                                 ( )                                                                                   ( )
                                                                                 100                                                                                   100
                                                                                                                                          Percentage of each part marked.

      and suitable for an environmental report?
                                                        Percentage of each part marked.

                                                                                          80                                                                                80
                                           Not at all
            Definitely (92   )             (0 )                                                                                                                             60

                         Somewhat (8   )                                                           38
                                                                                          40                                                                                40       31
                                                                                                                23           23                                                                  23          23
  (2) What parts impressed you most? (Mark all                                            20                                                                                20

      that apply.)
                                                                                          0                                                                                 0
                                                                                                   Fiscal   Environmental Fiscal                                                     Fiscal   Environmental Social
      Please look at the graph 1.                                                                   2000    management       2000                                                     2000    management     action
                                                                                                  program                  program                                                  program                programs
  (3) On which topics would you like more infor-                                               achievements             achievements                                             achievements
                                                                                                                                                                                  - Recycling
                                                                                                - Recycling            - Development
                                                                                                                         process and
      mation in future? (Mark all that apply.)                                                                       automobile-related
      Please look at the graph 2.

2. These are some examples of the ideas and opinions we received about the report's contents and our
  environmental conservation activities.
  (1) Disclose the detailed information about the environmental audit.
  (2) Contents on the efficient dismantling of end-of-life automobiles are good. Explain more about
      disposal of the products as a whole.
  (3) Give this report more integrated expository writing, since there are two kinds of explanation, bottom
      notes and glossary.
  (4) Set up the environmental management system also in dealers.

We received many valuable opinions besides these. To the extent possible, we have incorporated them
in our Year 2002 Environmental Report. However, there is always room for improvement, and we again
solicit the opinions and guidance of our readers.
        2002 Environmental Report      QUESTIONNAIRE FAX FORM
       Please check the box(es) corresponding to your answer.

        Q1. How did you come to know about the 2002 Environmental Report?
          Newspaper article         Magazine article      FHI's Web site      Other Web Site       FHI employee
          FHI business partner/supplier          Subaru dealership    Friend or acquaintance
          Other (Please specify                                                                                                       )

        Q2. Were the contents of this report sufficient and suitable for an environmental report?
          Definitely     Very much       Somewhat         Not very much       Not at all
        Please tell us the reasons.

        Q3. What do you think of FHI's environmental conservation activities?
          Definitely sufficient     Sufficient     Good      Not very enough       Definitely not enough
        Please tell us the reasons.

        Q4. What parts impressed you most? (Please mark all that apply.)
          Environmental management          Environment New Voluntary Plans        Environmental audit     Environmental accounting
          Overall achievements in fiscal 2001 and fiscal 2002 goals
          Fiscal 2001 program achievements - development process and products (Automobile-related products)
          Fiscal 2001 program achievements - development process and products (Products other than automobiles)
          Fiscal 2001 program achievements - production           Fiscal 2001 program achievements - recycling
          Fiscal 2001 program achievements - logistics          Social action programs      Overseas activities
          Environmental conservation activities in affiliated companies         Plant site data     Related data
          FHI environmental chronology           Glossary
        Q5. Please tell us what topics you would like more detailed information on.

        Q6. What is your opinion of FHI's environmental activities based on this report?

        Q7. What is your relationship with FHI?
          Customer       Resident of an area neighboring an FHI installation         Engaged in government administration
          FHI shareholder         News media-related        Related to an environmental NGO or NPO
          Finance- or investment related          Business partner/supplier     Employee or family member of employee
          Other (Please specify                                                                                                       )

Thank you for your cooperation. If you wish, please give us some information about yourself (optional).
     Name                                                                                         Male/female               Age

     Occupation                                         Employer                       Department/title

     Address (workplace or home)                                                       Telephone

   To: Fuji Heavy Industries LTD., Environmental Affairs Promotion Office
                             FAX: 03-3347-2015
                                                    This picture on the cover of 2002 Environmental
                                                    Report was created by coloring a picture in
                                                    Subaru blue, which was taken from underwater,
                                                    looking at the surface of the sea where a big
                                                    piece of ice was floating.
                                                    You can see sunlight coming into the sea and
                                                    feel the beautiful harmony of nature, the sea, the
                                                    light and the ice.

Please contact Fuji Heavy Industries' Environmental Affairs Promotion
    Office with questions or comments about this report by fax at
                        (03) 3347-2015

                          Homepage URL
                                                     FUJI HEAVY INDUSTRIES LTD.
                               Subaru Building, 7-2, Nishi-Shinjuku 1-chome, Shinjuku-ku, Tokyo 160-8316, Japan

This environmental report is printed on 100% recycled paper. This is achieved by a printing method without
water that does not need alkaline developer or isopropyl alcohol, with a printing ink made of 100% soy oil.

Published in September 2002

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